Assignment-6

XYZ Co. manufactures bicycles. Demand for this years model is expected to occur at a constant annual rate of 9000 items. One bicycle costs $145. The holding cost is based on a 7% annual rate, and production setup costs are $480. The manufacturing plant has an annual production capacity of 16000 units. Acme has 280 working days per year, and the lead time for a production run is 3 days. Use the production lot size model to compute the following values:

a) Minimum cost production lot size

b) Number of production runs per year

c) Cycle time

d) Length of a production run

e) Maximum inventory

f) Total annual cost

g) Reorder point