Question

# STUDY GUIDE QUESTIONS: I just want to make sure I can get correct answers for these questions I am struggling

with. Thank you.

A producer of industrial climate control modules has recently changed to cellular manufacturing. The production facility operates 320 days per year and has annual demand of 9,600 units. They can produce up to 65 modules each day. It costs $21.64 to set up a work cell to produce this module. The cost of each module is $45 and annual holding costs are $11.90 per unit. Setup labor cost is $11 per hour.

What is the optimal size of the production run for this module? (Display your answer to the nearest **whole** number).

Given your answer to the previous question, how many production runs will be required each year in order to meet the annual demand? (Round your answer **UP** to the **next** **whole** number.)

How much time (in minutes) does it take to set up a work cell? (Display your answer to the nearest **whole** number.)

Suppose the main customer for this module wants to purchase in quantities of 30 units. What is the required setup time (in minutes) to make this order quantity an optimal production run quantity? (Display your answer to the nearest **whole** number.)

Freedom Safe makes a variety of safes for home use. Many parts in their bills of materials (BOMs) are standard items that can be used across a number of products. For example, one dial is used on a number of safes.

In recent months the company has been implementing JIT and Lean principles in order to reduce costs and improve quality. One such initiative has led to a VMI (vendor managed inventory) agreement with its dial supplier, thus reducing Freedom Safe's ordering costs from $21.77 to $6.53. Annual demand for this dial is 28,000 units. Annual holding costs are $2.08 per dial.

Hint #1: This is a purchasing order quantity problem (EOQ), not a production order quantity problem. For this question we are combining a JIT concept (lower ordering costs) with what you learned from a previous chapter (inventory management). If necessary, refer back to that chapter.

Hint #2: Remember to use cell references in all your formulas rather than using a rounded input value from a previous calculation.

Based on this information, what will be the new optimal order quantity for dials (using the reduced ordering cost)? (Display your answer to the nearest **whole** number.)

When using the reduced ordering cost, as compared to the original ordering cost, how many dials on average will Freedom Safe hold in inventory (assuming they hold no safety stock)? (Display your answer to the nearest **whole** number.)

What will be the annual total combined savings to ordering costs and holding costs when using the reduced order cost, as compared to the original ordering cost? (Display your answer to **two** decimal places.)

Swansong, a new cell phone manufacturer, wants to give customers more choice in the selection of back covers for their phones. Customers order the phones directly from the manufacturer and can select from the following materials for the back cover of the phone: bamboo, walnut, black aluminum, and plastic covers in a variety of colors.

The bamboo back cover is particularly popular with daily demand being 43 units per hour. This cover is produced on site in the same line that produces the walnut cover. Lead time for the bamboo back cover is 9 hours and the kanban container size is 35. The manufacturer likes to keep a 21 percent buffer of safety stock on hand for the bamboo covers.

Given the above information, how many kanbans do they require for the bamboo back cover? (Display your answer to the **most appropriate** whole number.)

The Ham Bone Sandwich Company makes rib-shaped barbecue pork sandwiches that are frozen, boxed and shipped to large retailers. You have been asked to reduce inventory by establishing a kanban system. The daily production (demand) rate is 360 boxes. The production lead time is 5 days. They want to keep 1.5 days of safety stock on hand in finished goods (the safety stock factor) in order to respond quickly to spikes in demand. The kanban size is 80 boxes (which is roughly one pallet's worth of sandwiches).

How many kanbans do they require? (Display your answer to the **most appropriate** whole number.)