• Chapter 5: Problems 1 & 3 (pp. 208-209)
• Chapter 12: Problems 15 & 16 (pp. 547-548)
1. Determine the utilization and the efficiency for each of these situations:
a. A loan processing operation that processes an average of 7 loans per day. The operation has a design capacity of 10 loans per day and an effective capacity of 8 loans per day.
b. A furnace repair team that services an average of four furnaces a day if the design capacity is six furnaces a day and the effective capacity is five furnaces a day.
c. Would you say that systems that have higher efficiency ratios than other systems will always have higher utilization ratios than those other systems? Explain.
3. A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs of $9,200 per month and variable costs of 70 cents per unit produced. Each item is sold to retailers at a price that averages 90 cents.
a. What volume per month is required in order to break even?
b. What profit would be realized on a monthly volume of 61,000 units? 87,000 units?
c. What volume is needed to obtain a profit of $16,000 per month?
d. What volume is needed to provide a revenue of $23,000 per month?
e. Plot the total cost and total revenue lines.
15. A company that manufactures paving material for driveways and parking lots expects the following demand for its product for the next four weeks:
The company’s labor and machine standards and available capacities are as follows:
a. Determine the capacity utilization for labor and machine for each of the four weeks.
b. In which weeks do you foresee a problem? What options would you suggest to resolve any problems? What costs are relevant in making a decision on choosing an option?
16. A company produces two very similar products that go through a three-step sequence of fabrication, assembly, and packaging. Each step requires one day for a lot to be completely processed and moved to the next department. Processing requirements for the departments (hours per unit) are
Department capacities are all 700 hours of labor and 500 hours of machine time, except Friday, when capacities are 200 hours for both labor and machine time. The following production schedule is for next week:
a. Develop a production schedule for each department that shows the capacity requirements for each product and the total load for each day. Ignore changeover time.
b. Evaluate the projected loading for the first three days of the week. Is the schedule feasible? What do you suggest for balancing the load?
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