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. (Round your answer to the next whole number.) Cells

Explanation / Answer

Ans.1)

Number of cells currently used = 2

Current Annual Demand = 50000 units

Number of working days = 240

Estimated Demand after two years = 50000 x 3 = 150000 units

Given that the plant operates 240 days per year. Therefore, in order to fulfill the estimated demand of 150000 units after two years;

Daily production should be = 150000 / 240 = 625 units per day

Current average output = 200 units per cell

Required number of cells to fulfill the estimated demand (with current capacity):

625 / 200 = 3.12 cells = 4 cells (Since, you cannot acquire a partial cell).

In this case, the company will have to acquire 2 cells, as they already have 2 cells.

Also, this is based on current production capacity of the cells. If the prediction of manager is correct and if they can really increase the production capacity to 225 units per day per cell;

Required number of cells to fulfill the estimated demand (with increased capacity):

625 / 225 = 2.77 cells = 3 cells (Since, you cannot acquire a partial cell)

In this case, the company will have to acquire 1 cell, as they already have 2 cells.

Ans.2) (a)

Utilization = Actual Output / Design Capacity

Therefore, Utilization = 6 loans per day / 10 loans per day = 60%

Efficiency = Actual Output / Effective Capacity

Therefore, Efficiency = 6 loans per day / 8 loans per day = 75%

Ans.2) (b)

Utilization = Actual Output / Design Capacity

Therefore, Utilization = 3 furnaces per day / 9 furnaces per day = 33.3%

Efficiency = Actual Output / Effective Capacity

Therefore, Efficiency = 3 furnaces per day / 8 furnaces per day = 37.5%

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.