JL.53 Bob's Bumpers hasa repetitive manufacturing facility in Kentucky that makes automobile bumpers and other auto body
Question:
JL.53 Bob's Bumpers hasa repetitive manufacturing facility in Kentucky that makes automobile bumpers and other auto body parts. The facility operates 320days per year and has annual demand of 78,000 bumpers. They can produce up to 420 bumpers each day. It costs $83to set up the production line to produce bumpers. The cost of each bumper is $98and annual holding costs are $40 per unit. Setup labor cost is$25per hour.
Suppose the customer (an auto manufacturer) wants to purchase in lots of 610 and that Bob's Bumpers is able to reduce setup costs to the point where 610 is now the optimal production run quantity. How much will they save in annual holding costs with this new lower production quantity? (Display your answer to two decimal places.)