A Toy Manufacturer Makes Its Own Wind-Up Motors, Which Are

Essay

A toy manufacturer makes its own wind-up motors, which are then put into its toys. While the toy manufacturing process is continuous, the motors are intermittent flow. Data on the manufacture of the motors appears below.
Annual demand (D) = 25,000 units Daily subassembly production rate = 1,000
Setup cost (S) = $85 per batch Daily subassembly usage rate = 400
Carrying cost = $2.00 per unit per year
(a) To minimize cost, how large should each batch of subassemblies be?
(b) Approximately how many days are required to produce a batch?
(c) How long is a complete cycle?
(d) What is the average inventory for this problem?
(e) What is the total annual inventory cost (holding plus setup) of the optimal behavior in this problem?