Question 1
A firm wants to develop a level material use schedule based on the following data. What should be the setup cost?
| Desired lot size: | 60 |
| Annual demand: | 40,000 |
| Holding cost: | $20 per unit per year |
| Daily production rate: | 320 |
| Work days per year: | 250 |
◦ $500
◦ $450
◦ $4.50
◦ $45
◦ $0.45
Question 2
A product has annual demand of 100,000 units. The plant manager wants production to follow a four-hour cycle. Based on the following data, what setup cost will enable the desired production cycle? d = 400 per day (250 days per year), p = 4000 units per day, H = $40 per unit per year, and Q = 200 (demand for four hours, half a day).
◦ $2.00
◦ $1,036.80
◦ $64.00
◦ $18.00
◦ $7.20
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