Ross White wants to reconsider his decision of buying the brackets and is considering making the brackets in-house. he has determined that set-up costs would be $25 in machinist time and lost production time, and 0 brackets could be produced in a day once the machine has been set up. Ross estimates that the cost (including labor time and materials) of producing one bracket would be $14.80. the holding cost would be 10% of this cost.
(a) Calculate the daily demand rate
(b) Calcualta the optimal production quantity
(c) How long will it take to produce the optimal quantity?
(d) how much inventory is sold during the time it takes to produce the optimal quantity?
(e) If RW uses the the optimal production quanity, what would be:
i. maximum inventory level?
ii. average inventory level?
iii. annual holding cost?
(f) how many production runs would there be each year?
(g) what would be the annual set up cost?