Question: Case Study #4 (Optional) Background WeRfast is a specialty bicycle manufacturing firm located in Northern California. They make all kinds of bicycle computers including those

Case Study #4 (Optional) Background WeRfast is a

Case Study #4 (Optional) Background WeRfast is a specialty bicycle manufacturing firm located in Northern California. They make all kinds of bicycle computers including those for road bikes, mountain bikes, and e-bikes. Scooter Jones is the president of WeRFast and is becoming concerned about the production policy for the company's best- selling street bike computer with GPS. Annual demand has been steady at 10,000 units each year. Recause werFast sells to retailers throughout the United States and online, demand is constant throughout the year. Production capacity at the WeRFast factory is 250 units per day. For each production run, it costs the company $120 to change the assembly line for a new computer including moving raw materials and changing dies. The holding cost for the bicycle computers, which sell for $150 per unit retail, is $50 per year in a secure storage area at the factory. Part 1 Scooter notes that the current production plan calls for 500 computers to be produced in each assembly run. Knowing that there are 250 working days per years (and over 100 days for bicycling!), please address the following questions. Questions 1. What is the daily demand for this product? 2. If WeRfast continues to produce 500 units each time an assembly run starts, how many days does production continue? 3. Under the current policy, how many production runs are needed per year? What is the annual setup cost? 4. If the current policy continues, how many computers would be in inventory when production stops? What would the average inventory level be? 5. If the company produces 500 bicycle computers at a time, what would the total annual setup and holding cost be? 6. If Scooter Jones want to minimize the total annual inventory cost, how many computers should be manufactured and assembled in each production run? How much would this save the company in inventory costs compared to the current policy of producing 500 units in each run

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