Quiz01-KEY

Quiz01-KEY - ISE 211 Engineering Economy Fall 2006 Quiz# 1...

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ISE 211 Engineering Economy Fall 2006 – Quiz# 1 Name : __________________ ______________ Problem # 1: The total relevant cost of holding inventory in a plant for purchased materials is given, TRC = (6000/Q)(60) + 0.30(12)(Q/2)+6000(12) where Q= economic order quantity. Determine the optimum order quantity and the corresponding total relevant cost (TRC). Solution: TRC = (6000/Q)(60) + 0.30(12)(Q/2)+6000(12) Differentiating TRC with respect to Q, we get d (TRC)/dQ = -(360,000) Q -2 + 1.8 Q = (√ 360,000/1.8) = 447 TRC = (6000/447)(60) + 0.30(12)(447/2)+6000(12) = $73,610
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Problem # 2: A manufacturing firm has received a contract to assemble 1000 units of test equipment in the next year. The firm must decide how to organize its assembly operation. Skilled workers, at $22.00 per hour each, could be assigned to individually assemble the test equipment. Each worker would do all the assembly steps and the task would take 2.6 hours per unit. An alternative approach would be to set up teams of four less skilled workers (at $13.00 per hour
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Quiz01-KEY - ISE 211 Engineering Economy Fall 2006 Quiz# 1...

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