Score: 0 of 16 pts 3 of 4 (1 complete) Hw Score: 25%, 20 of 80 pts Problem 12.19

Question

Score: 0 of 16 pts 3 of 4 (1 complete) Hw Score: 25%, 20 of 80 pts Problem 12.19 Question Help Radovilsky Manufacturing Company, in Hayward, California, makes flashing lights for toys. The company operates its production facility 300 days per year. It has orders for about 11,600 flashing lights per year and has the capability of producing 100 per day. Setting up the light production costs $49. The cost of each light is $1.00. The holding cost is $0.05 per light per year. a) What is the optimal size of the production run?units (round your response to the nearest whole number)

Explanation / Answer

Optimal size production run:

D = 11,600. p = no. of days*production capacity per day = 300*100 = 30,000. Co = set up cost = $49. Ch = holding cost = $0.05

a. optimal size of production run = (2*D*Co/ Ch)^0.5 * (p/p-D)^0.5

= (2*11600*49/0.05)^0.5 * (30000/30000-11600)^0.5

= 4768.23*1.28

= 6088.48 or 6,088 (rounding off to nearest whole number).

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