Problem:
Arthur Meiners is the production manager of Wheel-Rite, a small producer of metal parts. Wheel-Rite supplies Cal-Tex, a larger assembly company, with 10,600 wheel bearings each year. This order has been stable for some time. Setup cost for Wheel-Rite is $41, and holding cost is $0.70 per wheel bearing per year. Wheel-Rite can produce 500 wheel bearings per day. Cal-Tex is a just-in-time manufacturer and requires that 51 bearings be shipped to it each business day.
Required:
Question 1) What is the optimum production quantity? _______units
Question 2) What is the maximum number of wheel bearings that will be in inventory at Wheel-Rite?_______ units
Question 3) How many production runs of wheel bearings will Wheel-Rite have in a year?_______runs
Question 4) What is the toal setup plus holding cost for Wheel-Rite? $________
Solve the problem and show all work.