BMW produces three different types of wheels – 17-inch, 18-inch, and 19-inch – in its manufacturing facility for the BMW3 series cars. The production rate is 1000 units per day for each wheel type. However, each time the manufacturing facility switches from producing a wheel type to another, the production should be stopped for one day for reconfiguring machinery. Demands for wheels, unit production costs, and fixed reconfiguration costs are as follows: Wheel Demand (units/day) Production cost ($/unit) Reconfiguration cost ($) respectively; 17-inch 230 80 10000 18-inch 320 100 6000 19-inch 200 110 6000 The inventory holding cost per unit per year is 20% of the unit production cost for each wheel type. Assume 365 days in a year. BMW wants to implement a rotation cycle policy: the manufacturing facility is set up exactly once for each wheel type in each cycle. (b) What is the optimal total relevant annual cost (inventory holding costs plus reconfiguration costs) for these wheel types?
BMW produces three different types of wheels – 17-inch, 18-inch, and 19-inch – in its manufacturing facility for the BMW3 series cars. The production rate is 1000 units per day for each wheel type. However, each time the manufacturing facility switches from producing a wheel type to another, the production should be stopped for one day for reconfiguring machinery. Demands for wheels, unit production costs, and fixed reconfiguration costs are as follows: Wheel Demand (units/day) Production cost ($/unit) Reconfiguration cost ($) respectively; 17-inch 230 80 10000 18-inch 320 100 6000 19-inch 200 110 6000 The inventory holding cost per unit per year is 20% of the unit production cost for each wheel type. Assume 365 days in a year. BMW wants to implement a rotation cycle policy: the manufacturing facility is set up exactly once for each wheel type in each cycle.
(b) What is the optimal total relevant annual cost (inventory holding costs plus reconfiguration costs) for these wheel types?
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