Assignment:
Rick Wing has a repetitive manufacturing plant producing automobile steering wheels. Use the following data to prepare for a reduced lot size. The firm uses a work year of 305 days.
| Annual demand for steering wheels |
30,500 |
| Daily demand |
100 |
| Daily production (8 hours) |
800 |
| Desired lot size (2 hours of production) |
200 |
| Holding cost per unit per year |
$10 |
a) What is the setup cost, based on the desired lot size?
b) What is the setup time, based on $40 per hour setup labor?
Provide complete and step by step solution for the question and show calculations and use formulas.