Demco Products, a company that manufactures stainless steel control valves, has a fund for equipment replacement that contains $

Answer:

setup cost = $1.75

setup time = 2.625 min

Explanation:

given data

The firm operates for 250 days annually.

Annual demand is 22,000.

Daily demand is 88.

Daily production stands at 250.

Desired lot size is set at 63 (equivalent to 2 hours of output).

Holding costs are $40 per unit each year.

To determine

the setup cost and setup time

solution

The setup cost is calculated as

setup cost = ......................1

Here, Q represents the desired lot size, H is the holding cost, d denotes daily demand, D is annual demand, and p is the daily output.

Plugging in the values,

setup cost =

setup cost =

setup cost = $1.75

Next,

the setup time is given by

setup time = ....................2

setup time =

setup time = 2.625 min

Conclusion: Peter has a remaining amount of $1.25 after he covers the service expenses.

Reasoning:

The total cost for 5/6 of a month amounts to (5/6)*$10.5= 0.83333*$10.5

= $8.75

Thus, the difference between his initial funds and his expense for the service will result in his change.

Change = $10.5-$8.75

=$ 1.25.

I hope this response was helpful.