Question

Race One Motors is an Indonesian car manufacturer. At its largest manufacturing​ facility, in​ Jakarta, the company produces subcomponents at a rate of 295 per​ day, and it uses these subcomponents at a rate of 12 comma 700 per year​ (of 250 working​ days). Holding costs are ​$2 per item per​ year, and ordering costs are ​$29 per order. ​a) What is the economic production​ quantity? nothing units ​(round your response to two decimal​ places).

Answer 1

Answer: 666.13 units

Explanation:

Given that,

Production Per day (P) = 295

Usage rate of sub-components (D) = 12,700 per year (250 working​ days)

Holding cost (H) = $2 per item

Ordering costs (S) = ​$29 per order

$d = \frac{D}{250}$

$d = \frac{12,700}{250}$

         = $50.8

$[1-\frac{d}{P}]=[1-\frac{50.8}{295}]$

                          = 1 - 0.1722

                          = 0.8278

                          = 0.83

$Economic\ production\​ Quantity=\sqrt{\frac{2\times D\times S}{H\times[1-\frac{d}{P}] }}$

$Economic\ production\​ Quantity=\sqrt{\frac{2\times 12,700\times 29}{2\times 0.83 }}$    

$=\sqrt{443,734.94}$

= 666.13 units