Question

A toy manufacturer uses 48,000 rubber wheels per year for its popular truck series. The firm makes its own wheels, which can be produced at a rate of 800 per day. The toy trucks are assembled uniformly over the entire year. The carrying cost is 1 per wheel per year. The setup cost for a production run of wheels is45. The firm operates 240 days per year. Determine:

a. The optimal run size (EPQ)
b. The minimum total annual cost for carrying and setup
c. The cycle time for the optimal run size
d. The run time.

Answer 1

Without specific demand rate, setup cost, holding cost, and production rate, we cannot calculate the Economic Production Quantity (EPQ), minimum total annual cost, cycle time, or run time for the toy manufacturer's wheel production.

Step-by-step explanation:

The toy manufacturer produces 48,000 rubber wheels per year and can create these at a rate of 800 per day over 240 working days. To determine the optimal run size (EPQ), we need to apply the Economic Production Quantity model. However, as the information provided does not offer the demand rate (D), production rate (P), setup costs (S), and holding costs (H) per annum, we cannot calculate EPQ, the minimum total annual cost, cycle time, and run time without these specifics.

To calculate the EPQ, the formula EPQ = √((2DS)/H) * √(P/(P-D)) is used, with D representing the demand rate, S the setup cost, H the holding cost, and P the production rate. To calculate total annual cost, combine the setup and holding costs. The cycle time for EPQ is the EPQ divided by the demand rate per day, while the run time is the EPQ divided by the production rate per day.