Arthur Meiners is the production manager of? Wheel-Rite, a small producer of met

Question

Arthur Meiners is the production manager of? Wheel-Rite, a small producer of metal parts.? Wheel-Rite supplies? Cal-Tex, a larger assembly? company, with

9,700 wheel bearings each year. This order has been stable for some time. Setup cost for? Wheel-Rite is ?$41 and holding cost is ?$0.40 per wheel bearing per year.?

Wheel-Rite can produce 460 wheel bearings per day.? Cal-Tex is a? just-in-time manufacturer and requires that 47 bearings be shipped to it each business day.

A) What is the optimum production? quantity? ?(round your response to the nearest whole? number).

B) What is the maximum number of wheel bearings that will be in inventory at? Wheel-Rite? ?(round your response to the nearest whole? number).

C) How many production runs of wheel bearings will? Wheel-Rite have in a? year? (round your response to two decimal? places).

D) What is the total setup plus holding cost for? Wheel-Rite? round your response to two decimal? places).

?

Explanation / Answer

A. Optimum Production quantity :

POQ : sqrt [2DS/H(1-d/p)] = sqrt[(2*9700*41)/0.4(1-47/460)] = sqrt[2,215,598.8] = 1488.4 = 1488 bearings

B. maximum number of wheel bearings that will be in inventory at Wheel-Rite = POQ(1-d/p) = 1488(1-47/460) = 1335.96 = 1336 wheel bearings

C. Number of production runs of wheel bearings Wheel-Rite has in a year = 9700/1488 = 6.158 = 6.16

D. setup cost = 6.16*41 = 252.56

Holding cost = 0.5*HQ*(1-d/p) = 0.5*0.4*1488*(1-47/460) = 267.2

Setup cost + holding cost = 252.56+267.2 = 519.76

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