2 kon ltd can produce the disk drive housings in the hamilton ontario
2. KON Ltd. can produce the disk drive housings in the Hamilton, Ontario, plant at a rate of 150 housings
per month. Also, KON uses the drive housing at a fairly steady rate of 720 per year. The housings
cost $85 each to produce, and the setup cost for beginning a production run is $700. The holding cost
is assumed to be $14.28. (Apply the POQ model.)
(a) What is the optimal number of housings for KON to produce in each production run?
(b) Find (i) the time between initiation of production runs, (ii) the time devoted to production, and (iii)
the setup time (downtime) each production cycle.
(c) What is the maximum dollar investment in housing that KON has at any point in time?
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