EL Computer produces its multimedia notebook computer on a production line that has an annual capacity of 16,000 units. EL Computer estimates the annual demand for this notebook to be 6,000 units. The cost to set-up the production line is $2345, and the annual holding cost is $20 per unit. Current practice calls for production runs of 500 notebook computer each month. Show your solution. a. What is the optimal production lot size? b. How many production runs should be made each year? c. Would you recommend changing the current production lot size policy from the monthly 500-unit production runs? Why or why not? What is the projected savings of your recommendation?
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
EL Computer produces its multimedia notebook computer on a production line that has an annual capacity of 16,000 units. EL Computer estimates the annual demand for this notebook to be 6,000 units. The cost to set-up the production line is $2345, and the annual holding cost is $20 per unit. Current practice calls for production runs of 500 notebook computer each month.
Show your solution.
a. What is the optimal production lot size?
b. How many production runs should be made each year?
c. Would you recommend changing the current production lot size policy from the monthly 500-unit production runs? Why or why not? What is the projected savings of your recommendation?
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 8 images
