Determine the optimum setup time by employing the data

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Reference no: EM131649848

Sam Furniture, Inc., a firm that produces rustic furniture, desires to move toward a reduced lot size. Sam Furniture’s production analyst, Dave Smith, determined that a 2-hour production cycle would be acceptable between two departments. He also concluded that a setup time that would accommodate the 2-hour cycle time should be achieved. Determine the optimum setup time by employing the following data.

D = annual demand = 400000 units

d = daily demand = 400000 per 250 day = 1600 units/day

p = daily production rate = 4000 units per day

Qp = EOQ desired = 400 (which is the 2-hour demand; that is; 1600 per day per four 2-hour periods)

H = Holding cost = RM 20/unit /year

S = Setup cost (to be determined)

Hourly labour rate = RM 30

Reference no: EM131649848

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