Radovilsky Manufacturing? Company, in? Hayward, California, makes flashing light

ID: 418731 • Letter: R

Question

Radovilsky Manufacturing? Company, in? Hayward, California, makes flashing lights for toys. The company operates its production facility

300300

days per year. It has orders for about

12 comma 10012,100

flashing lights per year and has the capability of producing

9595

per day. Setting up the light production costs

?$4949.

The cost of each light is

?$1.001.00.

The holding cost is

?$0.150.15

per light per year.

?a) What is the optimal size of the production? run?

nothing

units ?(round your response to the nearest whole? number).

Following are the relevant details :

Annual demand = D = 12100

Daily demand = d = Annual demand / 300 days = 40.33

Daily production capacity = p = 95

Setting up cost = Cs = $49

Annual unit holding cost = Ch = $0.15

Optimal size of the production run ( EPQ )

= square root ( 2 x Cs x D / Ch x ( 1 – d/p) )

= square root ( 2 x 49 x 12100 /0.15 x ( 1 – 40.33/95) )

= square root ( 2 x 49 x 12100 / 0.15 x 0.575 )

= 3707.88 ( 3708 rounded to nearest whole number )

OPTIMAL SIZE OF PRODUCTION = 3708

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