Race One Motors is an Indonesian car manufacturer. At its largest manufacturing facility, in Jakata, the company produces subcomponents at a rate of 300 per day, and it uses these subcomponents at a rate of 12,500 per year (of 250 working days). Holding costs are $2 per item per year, and ordering costs are $30 per order.
What should be the optimum production quantity?
What is the maximum inventory achieved during a production run?
What is the average inventory?
What is the cycle time (number of days in a run)?
What is the run time (time of producing in a cycle)?
What is the total annual cost of producing and storing inventory?