You\'re managing an inspection bench at Trikes and have been tasked to determine

Question

You're managing an inspection bench at Trikes and have been tasked to determine your set up time for a particular component. You've been given the following information Annual Demand 39,000 units Daily Demand 150 units Daily Production 1,000 units Desired Lot Lize 150 units Holding cost per unit per year $10.00 set up labor cost per hour $40.00 You're managing an inspection bench at Trikes and have been tasked to determine your set up time for a particular component. You've been given the following information Annual Demand 39,000 units Daily Demand 150 units Daily Production 1,000 units Desired Lot Lize 150 units Holding cost per unit per year $10.00 set up labor cost per hour $40.00

Explanation / Answer

As per Economic Production quantity ( EPQ ) model ,

L = square root ( 2 x Cs x D / Ch x ( 1 – d/p))

Or, 150 = Square root ( 2 x Cs x 39000/ 10 x ( 1 – 150/1000))

Or, 150 = Square root ( 78000.Cs / 10 x 0.85)

Or, 150 = Square root ( 9176.47.Cs)

Or, 9176.47.Cs = 150 x 150

Or, Cs = 150 x 150/9176.47

Or, 2.45

Therefore , set up cost = $2.45

Set up labour cost per hour = $40

Therefore set up time = 2.45/40 hour = 2.45x 60/40 minutes = 3.675 minutes

SET UP TIME = 3.675 MINUTES

SET UP TIME = 3.675 MINUTES

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