Question: QUESTION 6 (Total 10 marks) Sipro Industries Sdn Bhd has secured a contract to produce subcomponents for Proton in Shah Alam. Its manufacturing facility in

QUESTION 6 (Total 10 marks) Sipro Industries Sdn

QUESTION 6 (Total 10 marks) Sipro Industries Sdn Bhd has secured a contract to produce subcomponents for Proton in Shah Alam. Its manufacturing facility in Bukit Beruntung is able to produce the subcomponents at a rate of 300 units per day, and it supplies these subcomponents to Proton at a rate of 12,500 units per year. The facility operates for 250 working days in a year. The holding costs for the subcomponents are RM2.00 per item per year, and set up costs to produce the subcomponents are RM30.00 per set up. i. What is the economic production quantity for Sipro? ii. What will be the maximum inventory level? iii. How many production runs per year will be made? iv. How long is its length of production run per production? v. What is the total annual cost of setting up and holding inventory? [2+2+2+2+2=10 marks]

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