What should the ideal setup cost and setup time be now

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Reference no: EM13954270

Krupp Refrigeration, Inc., is trying to reduce inventory and wants you to install a kanban system for compressors on one of its assembly lines.

Determine the size of the kanban and the number of kanbans (containers) needed.

Setup cost = $10

Annual holding cost per compressor = $100

Daily production = 200 compressors

Annual usage = 25,000 (50 weeks × 5 days each ×daily usage of 100 compressors)

Lead time = 3 days

Safety stock = 1/2day' s production of compressors

Krupp determined that the cost, on an hourly basis, of setting up equipment is $30.00

Is the given setup cost of $10.00 valid? If so, what is the ideal setup time?

Krupp later determines that the cost, on an hourly basis, of setting up equipment has now changed to $40.00.

What should the ideal setup cost and setup time be now?

Reference no: EM13954270

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