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The Fly-by-Nite Corporation produces executive jets. It buys five jet engines a week from an outside supplier, Hot Jet Industries. Order costs are currently $50 for each order and holding costs are $20 per week.

a. Determine Q* (lot size). How often on the average should orders be made? (N)

b. Suppose you are assigned the job of redesigning Fly-by-Nite for JIT. How much would order costs have to be reduced to for lot size to be one? How often would orders be made?

2. The JIT Appliance Company wants to reduce order costs by automating the ordering system. Currently orders for an inventory of washing machine motors take one hour to prepare. Assume inventory receipts are instantaneous. It costs $5 per hour to make up an order and $20 per motor per week to hold items in inventory. Demand averages 50 items per week.

a. Determine the Q* lot size.

b. Suppose the firm wishes to reduce lot size to one. How much does order time need to be reduced to ensure this? Assume all other costs are unchanged.

3. Quickie Manufacturing produces Widgets in work cells. Lead time per widget is six days, work content is three days, there are eight work stations, the average sales (demand) rate is three per day, thirty-two pieces are in-process, and product process speed is twenty-one per day. Where may there be problems here from a JIT perspective?

4. A JIT system uses kanban cards to authorize production and movement of materials. In one portion of the system, a work center uses an average of 100 pieces per hour while running. The manager has assigned an efficiency factor (X) of .20 to the center. Standard containers are designed to hold six dozen parts each. The cycle time for parts containers is about 105 minutes. How many containers are needed?

5. A machine cell uses 200 pounds of a certain material each day. Material is transported in

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