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# System Cost Problem

An engine manufacturer requires 82 pistons per day in its assembly operations. No shortages are to be allowed. The machine shop can produce 500 pistons per day. The cost associated with initiating manufacturing action is \$400, and the holding cost is \$0.45 per piston per day.

The manufacturing cost is \$105 per piston.

(a) Find the minimum-cost production quantity
(b) Find the minimum-cost procurement level if production lead time is 8 days.
(c) Calculate the total system cost per day.

See attached file for full problem description.

#### Solution Preview

An engine manufacturer requires 82 pistons per day in its assembly operations. No shortages are to be allowed. The machine shop can produce 500 pistons per day. The cost associated with initiating manufacturing action is \$400, and the holding cost is \$0.45 per piston per day.
The manufacturing cost is \$105 per piston.

(a) Find ...

#### Solution Summary

This solution is comprised of a detailed calculation to find the minimum-cost production quantity, the minimum-cost procurement level if production lead time is 8 days, and the total system cost per day.

\$2.19