, how often will the production process operate, and what is the length of a production run?
I need help. I have no idea how to do this. I know the answer for a, but not b. The answer for a, I am going to write it down. I just need help with b. Please, help!
1. All-Star Bat Manufacturing, Inc., supplies baseball bats to major and minor league baseball teams. After an initial order in January, demand over the six-month baseball season is approximately constant at 1000 bats per month. Assuming that the bat production process can handle up to 4000 bats per month, the bat production setup costs are $150 per setup, the production cost is $10 per bat, and the holding costs have a monthly rate of 2%,
a. what production lot size would you recommend to meet the demand during the baseball season?
Given,
Monthly demand=1000 bats.
Production capacity=4000 bats per month.
Setup cost=$150 per setup.
Production cost=$10 per bat.
Holding cost=2%.
Production lot size=√2AO/C
A=Annual demand.
O=Setup cost.
C=Holding cost.
√2*1000*12*150/2% of 10
√3600000/0.2
√18000000
√4242.64
4243(approx.)
b. If All-Star operates 20 days per month, how often will the production process operate, and what is the length of a production run?
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