Capacity Calculation for Jan's Electric Scissors Production

How many scissors should Jan produce in each batch?

What factors should Jan consider when determining the production batch size?

Answer:

Jan should produce 11 pairs of scissors in each batch. Jan's production capacity is 150 pairs per day.

Jan is the owner of a small company producing electric scissors used for cutting fabric. The annual demand for these scissors is 8,000 pairs. In the production process, Jan can produce 150 pairs of scissors per day on average. However, the daily demand for scissors has been about 40 pairs per day.

To determine the appropriate batch size for production, Jan needs to consider both the demand for scissors and the production capacity. Given the annual demand of 8,000 pairs, we can calculate the daily demand by dividing it by the number of days in a year: 8,000 / 365 = 21.92 pairs per day (approximately).

Since the daily demand is 40 pairs, we can find the surplus capacity by subtracting the demand from the production capacity: 150 - 40 = 110 pairs per day.

To calculate the batch size, the surplus capacity needs to be divided by the number of setup days. The setup cost is $100, and the carrying cost per pair per year is $0.30. By dividing the setup cost by the carrying cost per pair per year, we can determine the number of setup days, which is approximately 10.

Rounding up to the nearest whole number, the batch size can then be calculated by dividing the surplus capacity (110) by the number of setup days (10), resulting in 11 pairs of scissors in each batch.