Concept explainers
Bold Vision, Inc., makes laser printer and photocopier toner cartridges. The demand rate is 625 EP cartridges per week. The production rate is 1,736 EP cartridges per week, and the setup cost is $100. The value of inventory is $130 per unit, arid the holding cost is 20 percent of the inventory value. Bold Vision operates 52 weeks a year. What is the economic production lot size?
Interpretation: The Economic production of the lot of printer and cartridges made by the company are to be calculated.
Concept Introduction: Economic production of a lot is the quantity produced at lowest stock value. It is the minimum of total cost that requires for output.
Answer to Problem 1P
Economic production of the lot is 625.
Explanation of Solution
Given information:
Demand rate per week = 625 units, Production Rate per week = 1,736 Units and Holding cost = 20% of Stock value
Economic Order Quantity is the ideal quantity of stock to order for a given product.
The demand rate per week = 625 units
This means
Production Rate per week = 1,736 Units
Holding cost = 20% of Stock value
The Economic Production of Lot size,
So, 625 units are required for the economic production lot size.
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Chapter C Solutions
OPERATIONS MANAGEMENT LL PACKAGE
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