A company can produce a part it uses in an assembly operation at the rate of 50

Question

A company can produce a part it uses in an assembly operation at the rate of 50 an hour. The company operates 8 hours a day, 300 days a year. Daily usage of the part is 300 parts. The company uses the part every day. The run size is 6,000 parts. The annual holding cost is $2 per unit, and setup cost is $100.

1. How many runs per year will there be?

2. While production is occuring, how many parts per day are being added to inventory?

3. Assuming that production begins when there are no parts on hand, what is the manimum number of parts in inventory?

4. The machine produces only this product. Every so often, preventive maintenance which requires six working days, must be performed on it. Does this interrupt prodcution cycles, or is there enough time between cycles to perform the maintenance? Explain.

Can you please show your work.

Explanation / Answer

Annual demand D = 300 parts * 300 days= 90000 parts

1)

No of runs per year =Annual demand/Run size = 90000/6000v=15 runs per year

2)

Inventory added = Daily production – Daily usage = (50*8) – 300 = 400-300 = 100 parts per day

3)

No of days to complete the run size = 6000/(50*8) = 6000/400 = 15 days

Maximum no of parts in inventory = 15 days*100 parts per day = 1500 parts

4)

Daily usage = 300 parts

Preventive maintenance which requires six working days than 6 days usage = 6*300 = 1800 parts

But the maximum inventory we have is 1500 part. So it will interrupt production cycles

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