Race One Motors is an Indonesian car manufacturer At its lar

Race One Motors is an Indonesian car manufacturer At its largest manufactuning fac ility, in Jakarta the company produces sube omponents at a rate of 285 per day, and it uses these subcomponents at a rate of 12,100 per year (of 250 working days) Holding costs are $3 per item per year and ordering costs are $29 per order a) What is the economic production quantity? units (round your response to two decimal placs) b How many production nns per year will be made?production nns round your response to two decimal paces c)What will be the marnum rventory lever?unts (rund yo response to two decimal places) d)What percentage of time will the facility be producing components?[ to two decimal places) %(enter your response as a percentage rund d e)What ist..rual cost of ordering ard holding nventory?0ound your response to two decimal places)

Solution

Part 1 - Calculation of economic product quantity (EPQ)

EPQ = underroot of [2*d*s/(H - 1/dp)]

d = Total rate of use of subcomponents

s = ordering cost

h = holding cost

D/P = 48.4/285 = 0.1698

EPQ = underroot of [2*($12100)*$29]/[$3(1 - 0.1698) =531 days

Part 2 = Calculation of production runs per year

= Rate of use of subcomponents/EQP

= 12100/531 = 22.79

Part 3 - Calculation of Maximum inventory level

First t = EPQ/Total Production = 531/285 = 1.86

Second = Maximum Inventory level = (p-d)*t

p = 285 Production per day

d = Total Units = (12100/250) = 48.4

t = 2.28

Maximum Inventory Level = (285-48.4)*1.86 = 440

Part 4 = (t*Production per year.)/Working days

= (18.62*1.86)/285 = 12.15%