A variety of assembled products are made in batches on a batch-model assembly line. Every time a different product is produced, the line must be changed over, which results in lost production time....


A variety of assembled products are made in batches on a batch-model assembly line. Every time a different product is produced, the line must be changed over, which results in lost production time. The assembled product of interest here has an annual demand of 8,000 units. The changeover time to set up the line for this product is 12.0 hr. The company figures that the hourly rate for lost production time on the line due to changeovers is $250/hr. Annual holding cost for the product is $7.00 per unit. The product is currently made in batches of 800 units for shipment each month to the wholesale distributor. (a) Determine the total annual inventory cost for this product when produced in batch sizes of 800 units. (b) What is the economic batch quantity for this product? (c) How often would shipments be made using this economic batch quantity? (d) How much would the company save in annual inventory costs, if it produced batches equal to the economic batch quantity rather than 800 units?



Dec 02, 2021
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