Problem NO: 5

A certain piece of production equipment is used to produce various components for an assembled\nproduct. To keep in-process inventories low, it is desi

A certain piece of production equipment is used to produce various components for an assembled

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product. To keep in-process inventories low, it is desired to produce the components in batch sizes

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of 150 units. Demand for each product is 2500 units per year. Production downtime costs an

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estimated $200/hr. All of the components made on the equipment are of approximately equal unit

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cost, which is $9.00. Holding cost rate = 30%/yr. In how many minutes must the changeover

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between batches be completed in order for 150 units to be the economic order quantity?

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