1. XYZ Production Company Ltd. has the following information. Product: Housing B Cost of storage floor area = $6.4 per m2 Safety stock level = 350 units Stack area required = 4 m2 Cost of Housing = $4.27 Stack Height = 45 units Set up cost = $100.00 Insurance = 0.8% Cost of working capital = 20% Annual Demand = 36,000 units Production rate = 200 unites per day Open days = 300 per year For this problem check with the lecturer when you think you have all the required data before progressing on to perform the complete calculation . a) Discuss the issues associated with the days of the year, ie opening days and days in a year. What affect does this have on the calculation? b) Calculate the total cost of inventory per annum c) The Production quantity d) The average level of inventory e) The number of production runs per year. f) Discuss the affect on the above calculations and what this means to managing the operations if the cost of capital changes to 15% g) Discuss How the operations manager would schedule the number of production runs in the year.


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