Race One Motors is an Indonesian car manufacturer. At its largest manufacturing

Question

Race One Motors is an Indonesian car manufacturer. At its largest manufacturing facility, in Jakarta, the company produces subcomponents at a rate of 285 per day, and it uses these subcomponents at a rate of 12 comma 600 per year (of 250 working days). Holding costs are $3 per item per year, and ordering costs are $29 per order. a) What is the economic production quantity? nothing units (round your response to two decimal places). b) How many production runs per year will be made? nothing production runs (round your response to two decimal places). c) What will be the maximum inventory level? nothing units (round your response to two decimal places). d) What percentage of time will the facility be producing components? nothing % (enter your response as a percentage rounded to two decimal places). e) What is the annual cost of ordering and holding inventory? $nothing (round your response to two decimal places).

Explanation / Answer

S = ordering
cost = $29 per order

D = demand rate
= 12,600 per year

H= holding cost
= $3 per item per year

p = 285 units per day

u = 12,600/285
= 44 units per day

a) economic production quantity = sqrt(2DS/H)*sqrt(p/p-u)

sqrt(2*12600*29/3)*(285/(285-44)) = 537 units..

b)No of production run = D/Q = 12600/537 = 23 times

c)maximum inventory level = 537 - 537*44/285= 454

d)no of units produced per day = 12600/285 = 44.

e)holding cost = 3*12600 = 37800 dollar

ordering cost = 29*12600 =365400

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