Question 1
Given the following data: D = 65,000 units per year, S = $120 per setup, P = $5 per unit, and I = 25% per year, calculate the EOQ and calculate annual costs following EOQ behaviour.
Question 2
A toy manufacturer makes its own wind-up motors, which are then put into its toys. While the toy manufacturing process is continuous, the motors are intermittent flow. Data on the manufacture of the motors appears below.
| Annual demand (D) = 50,000 units | Daily subassembly production rate = 1,000 |
| Setup cost (S) = $85 per batch | Daily subassembly usage rate = 200 |
Carrying cost = $.20 per unit per year
a. To minimize cost, how large should each batch of subassemblies be?
b. Approximately how many days are required to produce a batch?
c. How long is a complete cycle?
d. What is the average inventory for this problem?
e. What is the total inventory cost (rounded to nearest dollar) of the optimal behaviour in this problem?
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