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Alpha Assemblies produces a wide variety of products in their central Nebraska facility. Many of these products fit within a line of standard truck and
Alpha Assemblies produces a wide variety of products in their central Nebraska facility. Many of these products fit within a line of standard truck and trailer parts. Within this is a set of hitches that can be made in two sizes (1-1/4 and 2) and five models (light duty, medium duty, medium duty with extender, heavy duty, and heavy duty with extender). All of the hitches in this line have "natural" finishes so no additional steps are necessary after they are cast. The machine used to cast these ten hitch variations is available for 2000 hours per year (40 hours per week for 50 weeks). Operators are paid $15.00 per hour including benefits. Hitch E is the 2 inch, medium duty, natural hitch. Hitch E has a forecast annual demand of 8,247 units for next year. It is currently produced in batches of 1500 units. It takes 0.0375 of an hour to produce Hitch E. Each setup requires 3 hours for one employee and no other costs are incurred in the setup process. The cost to hold inventory of Hitch E is $3.56 per unit per year. How much will be saved in annual ordering and holding costs if they switch from the current batch size to the EOQ value recommended by Simone? Don't round any numbers in the middle of the problem. Provide your answer to two (2) decimal places
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