Given the following information about a product, at Phyllis Simon’s firm, what is the appropriate setup time?
Ans:
D= Annual Demand = 39000
d = Daily demand = 150 Units
p = Daily production Rate = 1000 units
Q = EOQ Desired = 150 Units
H = Holding Cost = $ 10
S = Set Up Cost = [(150 ) ^ 2 * 10 * ( 1- 150/1000) ] / ( 2* 39000)
S= 22500 * 10 * (17/20) / (2* 39000)
S = 11250 * 17 / ( 2* 39000) = $ 2.451923
Setup Time = $ 2.45 /( hourly Labor Rate)
Set Up Time = 2.45 /40 = 0.06129 hours = 3.6778 ~ 3.7 minutes