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1aEPQ as PDF - HOMEWORK ABC Company makes wheels for its...

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HOMEWORK ABC Company makes wheels for its bicycles. The wheels are produced at the rate of 30 an hour. The bicycles are assembled at the rate 10 an hour. The company estimates that it takes 2 hours to set up the machine that makes the wheels before production can begin. All workers at the company are paid $15 per hour. Inventory carrying cost is estimated to be $5.00 per wheel per year. The company operates 8 hours a day, 250 days a year. a) Compute the economic production quantity for the wheels. b) Compute the maximum inventory. c) What is the average inventory? d) How long will it take the company to make a batch (or one lot) of wheels? e) Compute the average number of setups per year? That is, how many times will the company produce wheels in a year. f) What it Total Cost per year? g) What is the machine utilization? That is, what percentage of the time will the company be using the machine to produce wheels? h) What percentage of the time is the machine idle? i) What is the time interval between two consecutive runs.
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SOLUTION ABC Company makes wheels for its bicycles. The wheels are produced at the rate of 30 an hour. The bicycles are assembled at the rate 10 an hour. The company estimates that it takes 2 hours to set up the machine that makes the wheels before production can begin.
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