Question Two

A company is about to begin production of a new product. The manager of the department

that will produce one of the components of the new product wants to know how often the

machine used to produce the item will be available for other work. The machine will produce

the item at a rate of $200$ units a day. Eighty units will be used daily in assembling the final

product. The assembly will take place five days a week, $50$ weeks a year. The manager

estimates that it will take almost a full day to get the machine ready for a production run, at

a cost of $K300.$ Inventory holding costs will be $K10$ a year.

Required

a$)$ What run quantify should be used to minimize total annual cost?

b$)$ What is the length of a production run in days?

c$)$ During production, at what rate will inventory build up$?$

d$)$ If the manager wants to run another job between funs of this item. and needs a minimum

of $10$ days per cycle for the work, will there be enough time?

$4$ marks

e$)$ If the lead time is $14$ working day, at what point should the issembly of the final product

begin?