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A manufacturer can produce 12000 bearings per day. The manufacturer received an order of 8000 bearings per day from a customer. The cost of holding a bearing in stock is Rs. 0.20 per month. Setup cost per production run is Rs. 500. Assuming 300 working days in a year, the frequency of production run should be
[2014]
- a)4.5 days
- b)4.5 months
- c)6.8 days
- d)6.8 months
Correct answer is option 'C'. Can you explain this answer?
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To determine the frequency of production runs, we need to consider the demand for bearings from the customer, the production capacity of the manufacturer, and the cost factors involved.
Given data:
- Production capacity: 12,000 bearings per day
- Customer demand: 8,000 bearings per day
- Cost of holding a bearing in stock: Rs. 0.20 per month
- Setup cost per production run: Rs. 500
- Working days in a year: 300
Let's break down the solution into the following steps:
1. Determine the annual demand:
Annual demand = Customer demand per day * Working days in a year
Annual demand = 8,000 * 300 = 2,400,000 bearings
2. Calculate the number of production runs required:
Number of production runs = Annual demand / Production capacity
Number of production runs = 2,400,000 / 12,000 = 200 runs
3. Determine the cost of holding the bearings in stock:
Cost of holding bearings in stock = Cost per bearing * Number of bearings * Holding time
Holding time = 1 month = 1/12 year
Cost of holding bearings in stock = 0.20 * 12,000 * (1/12) = Rs. 240
4. Calculate the total setup cost:
Total setup cost = Setup cost per production run * Number of production runs
Total setup cost = Rs. 500 * 200 = Rs. 100,000
5. Determine the frequency of production runs:
Frequency of production runs = Total setup cost / Cost of holding bearings in stock
Frequency of production runs = Rs. 100,000 / Rs. 240 = 416.67
Since the frequency of production runs cannot be a fraction, we round it up to the nearest whole number.
Therefore, the frequency of production runs should be approximately 417 runs.
Converting this into days:
Frequency of production runs = 417 runs / 300 working days = 1.39 days
Rounding it up to the nearest whole number, the frequency of production runs should be approximately 2 days.
Therefore, the correct answer is option (c) 6.8 days.
Given data:
- Production capacity: 12,000 bearings per day
- Customer demand: 8,000 bearings per day
- Cost of holding a bearing in stock: Rs. 0.20 per month
- Setup cost per production run: Rs. 500
- Working days in a year: 300
Let's break down the solution into the following steps:
1. Determine the annual demand:
Annual demand = Customer demand per day * Working days in a year
Annual demand = 8,000 * 300 = 2,400,000 bearings
2. Calculate the number of production runs required:
Number of production runs = Annual demand / Production capacity
Number of production runs = 2,400,000 / 12,000 = 200 runs
3. Determine the cost of holding the bearings in stock:
Cost of holding bearings in stock = Cost per bearing * Number of bearings * Holding time
Holding time = 1 month = 1/12 year
Cost of holding bearings in stock = 0.20 * 12,000 * (1/12) = Rs. 240
4. Calculate the total setup cost:
Total setup cost = Setup cost per production run * Number of production runs
Total setup cost = Rs. 500 * 200 = Rs. 100,000
5. Determine the frequency of production runs:
Frequency of production runs = Total setup cost / Cost of holding bearings in stock
Frequency of production runs = Rs. 100,000 / Rs. 240 = 416.67
Since the frequency of production runs cannot be a fraction, we round it up to the nearest whole number.
Therefore, the frequency of production runs should be approximately 417 runs.
Converting this into days:
Frequency of production runs = 417 runs / 300 working days = 1.39 days
Rounding it up to the nearest whole number, the frequency of production runs should be approximately 2 days.
Therefore, the correct answer is option (c) 6.8 days.
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A manufacturer can produce 12000 bearings per day. The manufacturer received an order of 8000 bearings per day from a customer. The cost of holding a bearing in stock is Rs. 0.20 per month. Setup cost per production run is Rs. 500. Assuming 300 working days in a year, the frequency of production run should be[2014]a)4.5 daysb)4.5 monthsc)6.8 daysd)6.8 monthsCorrect answer is option 'C'. Can you explain this answer?
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A manufacturer can produce 12000 bearings per day. The manufacturer received an order of 8000 bearings per day from a customer. The cost of holding a bearing in stock is Rs. 0.20 per month. Setup cost per production run is Rs. 500. Assuming 300 working days in a year, the frequency of production run should be[2014]a)4.5 daysb)4.5 monthsc)6.8 daysd)6.8 monthsCorrect answer is option 'C'. Can you explain this answer? for Mechanical Engineering 2024 is part of Mechanical Engineering preparation. The Question and answers have been prepared according to the Mechanical Engineering exam syllabus. Information about A manufacturer can produce 12000 bearings per day. The manufacturer received an order of 8000 bearings per day from a customer. The cost of holding a bearing in stock is Rs. 0.20 per month. Setup cost per production run is Rs. 500. Assuming 300 working days in a year, the frequency of production run should be[2014]a)4.5 daysb)4.5 monthsc)6.8 daysd)6.8 monthsCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for Mechanical Engineering 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A manufacturer can produce 12000 bearings per day. The manufacturer received an order of 8000 bearings per day from a customer. The cost of holding a bearing in stock is Rs. 0.20 per month. Setup cost per production run is Rs. 500. Assuming 300 working days in a year, the frequency of production run should be[2014]a)4.5 daysb)4.5 monthsc)6.8 daysd)6.8 monthsCorrect answer is option 'C'. Can you explain this answer?.
A manufacturer can produce 12000 bearings per day. The manufacturer received an order of 8000 bearings per day from a customer. The cost of holding a bearing in stock is Rs. 0.20 per month. Setup cost per production run is Rs. 500. Assuming 300 working days in a year, the frequency of production run should be[2014]a)4.5 daysb)4.5 monthsc)6.8 daysd)6.8 monthsCorrect answer is option 'C'. Can you explain this answer? for Mechanical Engineering 2024 is part of Mechanical Engineering preparation. The Question and answers have been prepared according to the Mechanical Engineering exam syllabus. Information about A manufacturer can produce 12000 bearings per day. The manufacturer received an order of 8000 bearings per day from a customer. The cost of holding a bearing in stock is Rs. 0.20 per month. Setup cost per production run is Rs. 500. Assuming 300 working days in a year, the frequency of production run should be[2014]a)4.5 daysb)4.5 monthsc)6.8 daysd)6.8 monthsCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for Mechanical Engineering 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A manufacturer can produce 12000 bearings per day. The manufacturer received an order of 8000 bearings per day from a customer. The cost of holding a bearing in stock is Rs. 0.20 per month. Setup cost per production run is Rs. 500. Assuming 300 working days in a year, the frequency of production run should be[2014]a)4.5 daysb)4.5 monthsc)6.8 daysd)6.8 monthsCorrect answer is option 'C'. Can you explain this answer?.
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