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Your company produces chairs. The annual demand is 8000 units. The production capacity is 200 chairs per day. For each production run, the cost for
Your company produces chairs. The annual demand is 8000 units. The production capacity is 200 chairs per day. For each production run, the cost for resetting equipment, get all material ready for production and cleaning of equipment is R120. Annual holding cost for each chair is R50. For each production run 400 chairs is produced. Assume there are 250 working days per year. Answer the following questions: a) What is the daily demand for this product? (1) b) How many days would production continue if your company continues to produce 400 chairs for each production run? (1) c) For the current situation how many production runs annually is required? (1) d) What will the annual setup cost be based on (c)? (1) e) How many chairs will be in inventory (max inventory) for the current situation when production stops? (1) f) What will be the average inventory level be based on (e)? (1) g) If your company produces 400 chairs at a time, determine: (3) 1. Total annual holding cost? 2. Total annual set up cost? 3. Total annual cost? h) If you want to optimize the total annual inventory cost, how many chairs should you produce in each production
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