Problem 2 1 Setup Cost and Time Suppose that Roger, a production manager, is trying to run JIT, and wants to make 2 different lots each day The product Annual Demand is 400,000 units, with 250 working days in a year, which means daily demand is 1600 The desired lot size will thus be 1600 2 800 for Q His product line can produce 2000 units per day Holding cost is $25 unit What will his setup cost be What will his permitted setup time be (in hours), if the wage rate is $15 for one employee Suppose that the production line runs for 10 hours per day How many hours per day will the production line be busy making the 1600 units demanded (Exclude the two setup times and any defective product in your calculation)

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Question: Problem 2.1: Setup Cost and Time Suppose that Roger, a production manager, is trying to run JIT, and wants to make 2 different lots each

Problem 2.1: Setup Cost and Time

Suppose that Roger, a production manager, is trying to run JIT, and wants to make 2 different lots each day. The product Annual Demand is 400,000 units, with 250 working days in a year, which means daily demand is 1600. The desired lot size will thus be 1600/2 = 800 for Q. His product line can produce 2000 units per day. Holding cost is $25/unit.

What will his setup cost be?
What will his permitted setup time be (in hours), if the wage rate is $15 for one employee?
Suppose that the production line runs for 10 hours per day. How many hours per day will the production line be busy making the 1600 units demanded? (Exclude the two setup times and any defective product in your calculation)

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