2. (50 points) An automative company called OTOSAY produces an automotive part for domestic and foreign...

  

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2. (50 points) An automative company called OTOSAY produces an automotive part for domestic and foreign cars. One part, namely PA5478, is supplied to Bosch Car Services at a constant d units monthly. OTOSAY can produce this part at a rate of p per hour. At the beginning of each production run, a setup time is required to change the settings on the equipment which takes 1.5 hours. This setup leads to a setup cost. The setup cost (SS) is computed based on two cost items: i) Labor cost during setup ii) Cost due to idle time during setup. Labor cost is charged at a rate of SL per hour and the idle time during setup is estimated to cost the firm SK per hour. OTOSAY has established an i percent annual interest charge for determining inventory holding cost. Each part costs the company $c to produce, and they are sold for $r each to Bosch Car Services. OTOSAY runs 6 hours/day, 20 working days per month. Assume that OTOSAY operates 12 months in a year. Before solving the question, fill in the following table by selecting integer values from the given intervals and copy only the 1st and 3rd columns into your answer sheet. Parameter Interval Selected value d Р L K i C r [300; 400] (must be multiple of 20) [5; 10] [5; 10] [5; 10] [10; 20] [5; 10] [20; 30] C [10; 20] [5; 10] [20; 30] IMPORTANT NOTE: USE () TO REPRESENT THOUSANDS; USE (.) TO REPRESENT DECIMALS. Answer the following questions: a) (3 pts) What is the setup cost for each production run in OTOSAY (SS)? b) (6 pts) How many PA5478 parts should OTOSAY produce in each production run of this particular part in order to minimize their total annual average cost in OTOSAY? c) (3 pts) What fraction of production goes to inventory in OTOSAY? 2. (50 points) An automative company called OTOSAY produces an automotive part for domestic and foreign cars. One part, namely PA5478, is supplied to Bosch Car Services at a constant d units monthly. OTOSAY can produce this part at a rate of p per hour. At the beginning of each production run, a setup time is required to change the settings on the equipment which takes 1.5 hours. This setup leads to a setup cost. The setup cost (SS) is computed based on two cost items: i) Labor cost during setup ii) Cost due to idle time during setup. Labor cost is charged at a rate of SL per hour and the idle time during setup is estimated to cost the firm SK per hour. OTOSAY has established an i percent annual interest charge for determining inventory holding cost. Each part costs the company $c to produce, and they are sold for $r each to Bosch Car Services. OTOSAY runs 6 hours/day, 20 working days per month. Assume that OTOSAY operates 12 months in a year. Before solving the question, fill in the following table by selecting integer values from the given intervals and copy only the 1st and 3rd columns into your answer sheet. Parameter Interval Selected value d Р L K i C r [300; 400] (must be multiple of 20) [5; 10] [5; 10] [5; 10] [10; 20] [5; 10] [20; 30] C [10; 20] [5; 10] [20; 30] IMPORTANT NOTE: USE () TO REPRESENT THOUSANDS; USE (.) TO REPRESENT DECIMALS. Answer the following questions: a) (3 pts) What is the setup cost for each production run in OTOSAY (SS)? b) (6 pts) How many PA5478 parts should OTOSAY produce in each production run of this particular part in order to minimize their total annual average cost in OTOSAY? c) (3 pts) What fraction of production goes to inventory in OTOSAY?

Answer rating: 100% (QA)

A The setup cost for each production run in OTOSAY SS is SS 15L K B The number of PA5478 parts OTOSA... View the full answer