Problem: 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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- What is the setup cost, based on the desired lot size?
- What is the setup time, based on $40 per hour setup labor?