Holstein Computing Manufactures an Inexpensive Audio Card (Audio Max) for Assembly

question 105

Essay

Holstein Computing manufactures an inexpensive audio card (Audio Max) for assembly into several models of its microcomputers. The annual demand for this part is 100,000 units. The annual inventory carrying cost is $5 per unit and the cost of preparing an order and making production setup for the order is $750. The company operates 250 days per year. The machine used to manufacture this part has a production rate of 2000 units per day.
a. Calculate the optimum lot size.
b. How many lots are produced in a year?
c. What is the average inventory for Audio Max?
d. What is the annual cost of preparing the orders and making the setups for Audio Max?

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Definitions:

Endocrine

Pertaining to glands that secrete hormones directly into the blood rather than through a duct, influencing various bodily functions.

Lymphatic

Relating to the lymphatic system, which helps rid the body of toxins and is essential for transporting lymph, a fluid containing white blood cells.

Body Temperature

The measure of the body's ability to generate and lose heat, maintained within a narrow range necessary for normal bodily functions.