A Company Can Produce a Part It Uses in an Assembly

question 136

Essay

A company can produce a part it uses in an assembly operation at the rate of 50 an hour.The company operates eight 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.
(i)How many runs per year will there be?
(ii)While production is occurring,how many parts per day are being added to inventory?
(iii)Assuming that production begins when there are no parts on hand,what is the maximum number of parts in inventory?
(iv)The machine is dedicated to this product.Every so often,preventive maintenance,which requires six working days,must be performed on it.Does this interrupt production cycles,or is there enough time between cycles to perform the maintenance? Explain.

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Definitions:

Product

A good or service offered in the market to satisfy consumer needs or desires.

Promotion

Promotion involves activities designed to communicate the merits of a product or service with the aim to persuade target customers to purchase or consume more.

Financial Resources

Financial resources represent the funds a business has available for use in its operations, including cash, investments, and lines of credit.

Startup

A young company founded to develop a unique product or service and bring it to market.