Question: Annual demand for a certain part is 10,000 units. At present the setup time on the machine tool that makes this part is 5.0 hr.

Annual demand for a certain part is 10,000 units. At present the setup time on the machine tool that makes this part is 5.0 hr. Cost of downtime on this machine is $200/hr. Annual holding cost per part is $1.50. Determine
(a) EOQ and
(b) Total inventory costs for this data. Also, determine
(c) EOQ and
(d) Total inventory costs if the changeover time could be reduced to six minutes.

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