Given the following information about a product, at Michael Gibson’s firm, what is the appropriate setup time? Setup labor cost Annual holding cost Daily production Annual demand Desired lot size $50.00 per hour $16 per unit 1,000 units/day 26,000 (260 days each x daily demand of 100 units) 300 units Setup time minutes (round your response to two decimal places).
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Expert Answer
Set up time = (lot size * lot size)(holding cost)(1-(daily demand)/daily production)/(2* annual demand)
=(300*300)(16)(1-100/1000)/(2*26000)
= 24.92
Setup time = 24.92/50*60= 29.90 mins