A supplier of parts to an assembly plant in the household appliance industry is required to make deliveries on a just-in-time basis (daily). For one of the parts that must be delivered, the daily requirement is 200 parts, five days per week, 52 weeks per year. However, the supplier cannot afford to make just 200 parts each day; it must produce in larger batch sizes and maintain an inventory the parts from which 200 units are withdrawn for shipment each day. Cost per piece is $20 and holding cost is 24% of piece cost. Changeover time for the production machine used to produce the part is 2 hours and the cost of downtime on this machine is $250/hr. Determine
(a) The economic batch size and
(b) The total annual inventory cost for the data. It is desired to reduce the batch size from the value determined in part (a) to 200 units, consistent with the daily quantity delivered to the appliance assembly plant.
(c) Determine the changeover time that would allow the economic batch size in stamping to be 200 pieces.
(d) What is the corresponding total annual inventory cost for this batch size, assuming the changeover time in part (c) Can be realized?