Race One Motors is an Indonesian car manufacturer. At its largest manufacturing
ID: 365997 • Letter: R
Question
Race One Motors is an Indonesian car manufacturer. At its largest manufacturing facility, in Jakarta, the company produces subcomponents at a rate of 290
per day, and it uses these subcomponents at a rate of 12,800 per year (of 250 working days). Holding costs are $22 per item per year, and ordering costs are $31 per order.
a) What is the economic production quantity?
694 units (round your response to two decimal places).
b) How many production runs per year will be made?
18.44 production runs (round your response to two decimal places).
c) What will be the maximum inventory level?
571.47 units (round your response to two decimal places).
d) What percentage of time will the facility be producing components?
*I am stuck on step d. Please help!
Explanation / Answer
d)
No of production runs =18.44
Days of demand satisfied by production run= No of working days/No of production run = 250/18.44 = 13.56days
Days in production for each order = EPQ/daily production = 694/290 = 2.39 days
percentage of time will the facility be producing components = 2.39/13.56 = 0.1762 = 17.62%
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