Student version Ch5 section2

1 year 360 days h 42 unit year p 90 units day 800

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1 year = 360 days H = $4.2 / unit / year, p = 90 units / day =1800 * (90-50)/90=800 units Q” Q Inventory Run time = Q / p Cycle time = Q / u Q” = Q * (p u)/ p (a) Find optimal lot size u = 18000 / 360 = 50 [units / day] (b) Calculate run time, cycle time, Q” and AIC. (c) What if machine cannot be run for more than 15 days? Run time = 15 days Q* = 15*90 = 1350 , Cycle time = 1350/50 = 27 days and AIC(1350) = $3593.33 = 1750 + 1680 = $3430 D= Demand S = ordering costs H = holding costs p = production rate Q = production lot size Q O = optimum quantity Q” = Q max u = usage rate per day AIC = annual inventory cost
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