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TA Manufacturing Company produces transmission parts and sells to different Auto Repair shops 6 0 0 0 units per year. ATA can produce these transmission
TA Manufacturing Company produces transmission parts and sells to different
Auto Repair shops units per year. ATA can produce these transmission parts at a rate of unitshour
Machine setup time to produce these parts is hours. Labor for this work is estimated at a rate of
$hour and manufacturing plant idle time during setups is estimated to cost the firm around $ per
hour in lost profit. ATA uses a annual interest rate for holding cost estimation. Each transmission part
costs ATA $ to produce; they are sold for $ each to auto repair shops. ATA works one shift of ten
hours per day Monday through Saturday.
a points What is the optimal production quantity for this transmission part that minimizes inventory
related costs?
b points What is the maximum expected level of onhand inventory for these transmission parts?
c points What is the uptime and down time during each production cycle?
d points What is the total annual expected cost for the optimal production policy? What is the
expected annual profit
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