You are in charge of the department that receives the product in to the building

Question

You are in charge of the department that receives the product in to the building and stows it to the bin where it is accessible by the department. you have two options on how to receive and stow the product. In the first option, you receive the product at 250 units per labor hour and stow it at 100 units per labor hour. You must receive it and stow it for the unit to count for production. This process results in 1% of the units stowed being incorrect. You can find and fix these errors at a rate of 20 units for labor hour with what you believe is almost 100% accuracy. In the second option, you receive and stow the product in one step vs. two. The rate for this process is 80 units per labor hours for receive and stow. This process results in 1.5% of the units being stowed being incorrect. You can find and fix these errors at a rate of 20 units per hour with what you believe is almost 100% accuracy. 1. Which option would you select to process today's units and why? 2. Does your answer change if you are told you must fully process 100,000 units today? If yes, why? 3. Does your answer change if you are told that you have 15 associates today and you must fully produce the maximum amount of units possible? If yes, why?

Explanation / Answer

Lets assume 1000 units are to be processed

Option 1: 250 units received in... 1 L-Hrs

So, 1000units ....4 L-Hrs

100 units stowed ....1 LHr

So, 1000 units stowed.... 10 LHrs

1% units incorrect --- 10 units

So to fic error 20 units ---1 L-Hrs

So, 10 units-- 0.5 L-Hrs

Total L-Hrs by option-1 = 4 + 10+ 0.5 = 14.5 LHrs

Option 2 :

80 units receive + stow takes... 1 LHr

So, 1000 units receive + stow takes---- 12.5 Hrs

1.5% units being received and stowd incorrectly

1.5 % of 1000 --- 15 units

Correction process takes ...20 units in ---1 LHr

So, for 15 units would take .....15/20 = 0.75 LHr

Total L-Hrs by option-2 = 12.5 + 0.75 = 13.25 LHrs

1. Option 2 takes less LabourHours.So, we would prefer second option

2. If we have to process 100,000 units then:

Option-1 : Total LabourHour = 100000/250 + 100000/100 + 1000( 1% correction)/20

   = 400+1000+50 = 1450

Option-2 : Total LabourHour = 100000/80 + 1500 ( 1.5% correction ) / 20

= 1250 + 75 = 1325

No still Option -2 is the better option

3. If we have 15 associates

From Option 1

1450 Labour-Hrs produce for 100000 units

15 associates for 1 day means 360 L-Hrs

So, 1450L-Hrs produce 100000 units

So, 360L-hrs produce --- (100000/1450)* 360= 24827 units approx.

Option 2:

1325 L-Hrs produec 100,000 units

So, 360 L-Hrs would produce -- ( 100000/1325)* 360 = 27170 units approx

So we see that Option-2 produces more units in 1 day with 15 associates

Hope this helps!!

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