Plainwell Polymers is going to producing the main dashboard structure for a new
ID: 353426 • Letter: P
Question
Plainwell Polymers is going to producing the main dashboard structure for a new car design. The dashboard will be produced in three colors with expected daily demand as follows:
Black: 535 units/day
Grey: 155 units/day
Tan: 190 units/day
The injection-molding machine can produce a total of 1,085 parts per day running 24 hours per day.
It costs Plainwell $1,340 to set up each color for producition and the daily holding cost for each part is $0.38. What is the length of the lowest cost cyclic schedule (ignoring setup time constraints) in days?
Explanation / Answer
The problem will be solved using Economic Production Quantity ( EPQ ) model
Given are following data :
Daily demand for dashboards = d = .535 + 155 + 190 = 880
Daily production capacity = p = 1085 parts
Annual demand of parts = D = 880 x 365 = 321200
Set up cost = Cs = $1340
Annual unit holding cost = Ch = 0.38 x 365 = $138.7
Therefore ,
Economic production Quantity ( EPQ )
= Square root ( 2 x Cs x D / Ch x ( 1 – d/p))
= Square root ( 2 x 1340 x 321200 / 138.7 x ( 1 – 880/1085))
= Square root ( 2 x 1340 x 321200 / 138.7 x 0.189)
= 5730.41 ( 5730 rounded to nearest whole number )
Therefore length of lowest cost cyclic schedule = EPQ/Daily demand = 5730 / 880 = 6.51 days
LENGTH OF LOWEST COST CYCLIC SCHEDULE = 6.51 DAYS
LENGTH OF LOWEST COST CYCLIC SCHEDULE = 6.51 DAYS