I am having trouble working out the problem listed below, the answers are in the back of the book and i have provided those in parentheses behind the question, however I am having trouble coming up with the same answer and working it out. Thank you
El computer produces its multimedia notebook computer on a production line that has an annual capacity of 16,000 units. EL Computer estimates the annual demand for this model at 6,000 units. The cost to set up the production line is $2345, and the annual holding cost is $20 per unit. Current practice calls for production runs of 500 notebook computers each month.
a. what is the optimal production lot size. (1,500)
b. how many production runs should be made each year? What is the recommended cycle time. (4, 3-month cycle)
c. Would you recommend changing the current production lot size policy from the monthly 500-unit production runs? why or why not? What is the projected savings of your recommendation? ( change to Q*= 1,500, savings $12,510)
I am having trouble working out the problem listed below, the answers are in the back of the
book and i have provided those in parentheses behind the question, however I am having trouble
coming up…