Carol Cagle has a repetitive manufacturing plant producing trailer hitches in​ Arlington, Texas. The plant has an averag

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Carol Cagle has a repetitive manufacturing plant producing
trailer hitches in​ Arlington, Texas. The plant has an average
inventory turnover of only 12 times per year. He has therefore
determined that he will reduce his component lot sizes. He has
developed the following data for one​ component, the safety
chain​ clip:
Setup labor cost
​$30 per hour
Annual holding cost
​$13 per unit
Daily production
1,008 ​units/8 hour day
Annual demand
39,600 ​(275 days each×daily
Desired lot size
126 units​ (one hour of​ production)
To obtain the desired lot​ size, the​ set-up time that
should be achieved​ =