Problem -
Rick Wing has a repetitive manufacturing plant producing automobile steering wheels. Use the following data to prepare for a reduced lot size. The firm uses a work year of 305 days.
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Annual demand for steering wheels
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30,500
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Daily demand
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100
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Daily production (8 hours)
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800
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Desired lot size (2 hours of production)
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200
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Holding cost per unit per year
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$10
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a) What is the setup cost, based on the desired lot size?
b) What is the setup time, based on $40 per hour setup labor?