Answer:

(a)

If the setup time is reduced from 4 hours to 15 minutes, then the Economic Order Quantity (EOQ) optimum batch size will decrease. The company will be able to produce smaller lot sizes and thus have to hold fewer inventories.

(b)

Smaller EOQ batch sizes will imply that the order frequency for production will increase. Rather than making longer orders and building up more inventories, the company can make more frequent smaller orders and reduce inventory levels.

(c)

Reduced setup time means that the machine and labor has to spend more time producing goods, rather than being re-tooled for making a different product. This will increase both the labor and machine productivity since more time is spent on value-adding activities.

Answer:

Calculate the time required to produce given number of product units for the plant, using given details:

Time required for production of 1 unit = 400 hours

Percent learning rate for light alloy product = 80 percent

(a)

Solve this problem using the learning curve formula shown below:

… (1)

The learning rate for the light-alloy manufacturing industry is about 80 percent, the original production time is 400 hours, and n for the second item is 2.

Now putting the above values in formula (1), obtain the following results:

Hence, the total production time for second item would be

(b)

Calculate the production time for eighth item by putting n= 8 in the given formula (1), as shown below:

Thus, total production time for the eighth item is

.

(c)

Calculate production time for the 37th item by putting n= 37 in formula (1), as shown below:

Therefore, total production time for the 37th item would be

Answer:

Calculate the time required to produce fourth unit of a product, using given details:

Cost required for production of 2 units = $ 9000

Percent learning rate for the product = 80 percent

(a)

Solve this problem using the learning curve formula shown below:

… (1)

The learning rate is 80 percent and n for the fourth item is 4. Calculate the cost of the first unit using the following expression:

Use the fact that cost for the first two units was $9000, to calculate the cost involved in production of the first unit.

Now, calculate the cost of fourth unit using equation (1), as shown below:

Thus, the cost involved in manufacturing of fourth unit would be

.