What is total annual costs for inventory holding and setup

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Reference no: EM132119995

AL manufactures 490,000 wheels per year for popular truck series. The firm makes its own wheels, which it can produce at a rate of 7000 per day. The toy trucks are assembled uniformly over the entire year. Carrying cost is $12 per wheel a year. Setup cost for a production run of wheels is $420. The firm operates 260 days per year. (15 points)

(a) What is the Economic Production Quantity (EPQ) for this case?

(b) What is the maximum inventory level?

(d) [Challenging Question] What is the cycle time for the optimal production run size? (Hint: a run of wheels will be made every OO days.)

(e) [Challenging Question] What is the run time of each production? (Hint: each production run will require OO days to complete.)

Reference no: EM132119995

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