4. (20 pts) MedTech is a manufacturer of disposable syringes used in the medical

Question

4. (20 pts) MedTech is a manufacturer of disposable syringes used in the medical industry. After the disposable syringes are manufactured and packaged there is an FDA requirement that the syringes be s erilized before they can be shipped rom Me ec s faci ty The Sten ation e rs a echa n rand currently has a 12 hour cycle time (including the time to load and unload the chamber). MedTech currently has 3 sterilization chambers that have an average uptime of 98%. The diagram below shows how pallets of syringes are loaded into the sterilization chamber. The pallets are 48 inches by 54 inches and it takes about 10 minutes to load (unload) the pallets into (out of) the chamber. The outer dimensions of the chamber are 14 feet by 28 feet and the usable area of the chamber that can hold pallets is 10 feet wide and 21.5 feet long. MedTech currently runs the sterilization operation 24 hours a day, 7 days 54" 48" 10' 21.5 MedTech's current production schedule requires them to sterilize 300 pallets per week. In the next year MedTech sees that increasing to 340-350 per week, in two years to 350-375 per week, and in three years to 380-400 per week. In order to obtain increased sterilization capacity MedTech is considering the following options Change the sterilization gas that they use in order to reduce the cycle time to 9 hours. Changes to the equipment due to the gas conversion would cost S362,000 over the next 2 years. Annual sterilization gas costs for the new gas would be roughly equal to the gas costs for the current ii. iii. Purchase an additional sterilizer of the type they currently have at a cost of $417,000. Outsource additional sterilization, but the cost of outsourcing is 36% higher per disposable syringe than the cost of ten zing in-house. Which option and/or other ideas would you recommend to MedTech?

Explanation / Answer

First calculate the number of pallates that can fit in the sterilization chamber.

size of pallet=54"X48" or 4.5'X4'

based on the diagram max pallets in horizontal=21.5 feet/4.5 feet=4.77 or 4 pallets

Pallets in vertical=10/4=2.5 or 2 Pallets

total pallets in one chamber=4X2=6

cycle time=12 hours

therefore per day sterilization cycle=2

Total number of pallets treated in one day=numberof pallets per chamber*no: of chambers*no: of cycles=6*3*2=36

uptime for chamber=98%

Pallets sterilized in one week=36*7*.98=247

ie it is not able to make even 300 as required

Option 1

reduced cycle time=9 hrs

frequency/day=24/9

rest all things remaining same

Pallets sterilized in one week=6*24/9*3*7*.98=329

Ie it will only serve in first year as next year pallets sterilization requirement would increase to 340

cost of changes=$362000

option 2

with additional sterilizer, total no of sterilizer would increase to 4, with other figures remaining same

Pallets sterilized in one week=6*2*4*7*.98=329

like option 1, it will only serve in first year as next year pallets sterilization requirement would increase to 340

cost of purchase of new asset=$417000

Option3

outsourcing with higher cost

among the 3 options, 1st and 2nd are not able to fullfill the sterilization demand even after spending some amount. So, with current data it is advisable to outsource the sterilization process

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