A company manufactures a product using two machine cells. Each cell has a design

Question

A company manufactures a product using two machine cells. Each cell has a design capacity of 250 units per day and an effective capacity of 230 units per day. At present, actual output averages 200 units per cell, but the manager estimates that productivity improvements soon will increase output to 225 units per day. Annual demand is currently 50,000 units. It is forecasted that within two years, annual demand will triple. How many cells should the company plan to acquire to satisfy predicted demand under these conditions? Assume 240 workdays per year.

Explanation / Answer

Current Annual Demand =50000

Next Year it is slated to increase to=150000 units

Current Year Production Capacity=225x2x240=108000 units

Cells Required=150000/108000=1.38

Therefore One Cell will be acquired by the year end to satisfy the demand.

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