Question 1 Frank's machine shop operates 250 days per year. Frank sells 5,000 units per year of his most popular item, a specialty gear. The set-up cost for this gear is £100 and the monthly unit cost of holding inventory is 1% of the production cost per unit, which is £50.
The lead time is 10 days. When the gear is being produced, the shop can make 80 gears per day
Complete the following:
1. How many gears should be produced in each run and at what minimum cost?
2. What is the cycle time?
3. Find the reorder point. 4.Draw a graph to depict inventory level against time and show on it the quantities found above. Also, what is the maximum inventory level?
Question 2
Discussion questions in the case study (Dell's Value Chain) in the Heizer and Render textbook.