Setup labor cost and annual holding cost

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Reference no: EM13779376

Bill Penny has a repetitive manufacturing plant producing trailer hitches in Arlington, Texas. The plant has an average inventory turnover of only 12 times per year. He has therefore determined that he will reduce his component lot sizes. He has developed the following data for one component, the safety chain clip

Setup labor cost per hour = $ 30

Annual Holding cost per unit year = $ 13

Daily production = 992 units / 8 hours day

Annual Demand = 37,440 (260 days each * daily demand of 144 )

Desired lot size (1 hour of production) = 124 units to optain the desired lot size, the set-up time that should be achieved = ( ) minutes

Reference no: EM13779376

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