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Given the following information about a product, at Phyllis Simon’s firm, what is the appropriate setup time Answer

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

 

 

 

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