JL.53 Bob's Bumpers has a repetitive manufacturing facility inKentucky that makes automobile bumpers and other auto body parts.The facility operates 320 days per year and has annual demand of57,000 bumpers. They can produce up to 435 bumpers each day. Itcosts $50 to set up the production line to produce bumpers. Thecost of each bumper is $88 and annual holding costs are $35 perunit. Setup labor cost is $23 per hour.
What is the optimal size of the production run for bumpers?(Display your answer to the nearest wholenumber.)
Based on your answer to the previous question, and assuming themanufacturer holds no safety stock, what would be the averageinventory for these bumpers? (Display your answer to the nearestwhole number.)
Based on your answer two questions back, how many production runswill be required each year to satisfy demand? HINT: As a generalrule, whenever calculating a value that is based on previouscalculations in Excel, always be sure to use cell references ratherthan a rounded value as a calculation input. (Display your answerto the nearest whole number.)
Suppose the customer (an auto manufacturer) wants to purchase inlots of 260 and that Bob's Bumpers is able to reduce setup costs tothe point where 260 is now the optimal production run quantity. Howmuch will they save in annual holding costs with this new lowerproduction quantity? (Display your answer to twodecimal places.)
How much will they save in annual setup costs with this new lowerproduction quantity? (Display your answer to twodecimal places.)
