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1 Economic order quantities calculations In this case study I use POQ to calculate Optimal Quantities to Order because some the parts are made by companys plastic-molding machines in an assembly operations and units can be assumed that are received incrementally during production We also have the following assumptions - Only one item is involved because each type of toy has its own assembly line only one toy can be assembled at a time on this line - Annual Demand is known - Usage rate is constant - Usage occurs continually but production occurs periodically - The production rate is constant ie production rate of Toy Auto is 3500 Toy Truck 1750 Toy Robot 2333 - There are no quantity discounts Thus we have to find out the Set up cost Holding cost Demand per year Demand per week and production rate Therefore we have Set up Cost According to the case study we have the shop labor rate is the sum of 6 per hour for wages 33 fringe benefits and 6 per hour charged for overhead Moreover line 1 has 10 workers who engage in assembly Thus the setup cost is S 1 hour 10 workers 6 wages 0336 benefits 6 overhead 140 Holding Cost There is some ambiguity here The subcomponent costs in Exhibit 4 do not always add up to the Cost Each eg the cost for Auto is 39 which is level 0 item cost So I assumed that Line 1 labor costs at a
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