Consider a process consisting of three resources. Assume there exists unlimited
ID: 386864 • Letter: C
Question
Consider a process consisting of three resources. Assume there exists unlimited demand for the product.
Resource 1 has a processing time of 5 minutes per unit
Resource 2 has a processing time of 2 minutes per unit.
Resource 3 has a processing time of 5 minutes per unit.
All three resources are staffed by one worker and each worker gets paid $ 11 per hour. Use two decimals where applicable.
a. What is the cost of direct labor? $ dollars per unit
b. What is the labor content? minutes per unit
c. How much idle time does the worker at resource 3 have per unit? minutes per unit
d. What is the average labor utilization? percent
e. Assuming the demand rate is 24 units per hour, what is the takt time? minutes per unit
f. Assuming the demand rate is 24 units per hour, what is the target manpower?
Explanation / Answer
Resource 1 : 5 minutes/ unit
Resource 2 : 2 minutes / unit
Resource 3 : 5 minutes / unit
Resource 1 and resource 3 are the bottlenecks since they have maximum processing time per unit which also decides capacity of the process.
Therefore, capacity of the process is 5 minutes/ unit
Hence hourly capacity of the process = 60 / 5 = 12 units/ hour
There are 3 workers at 3 resources each of whom is paid $11 per hour . Therefore , total hourly wages paid = $11 x 3 = $33
Therefore , cost of direct labour = $33 / 12 = $2.75 / unit
Cost of direct labour = $2.75 / unit
= Process capacity in terms of minutes/ unit – Capacity of resource 3 in terms of minutes/ unit
= 5 minutes/ unit – 5 minutes/ unit
= 0
Idle time the worker has at resource 3 per unit = 0 minutes
= Total labour content in minutes/ unit / ( Number of resources x Process capacity in minutes / unit ) x 100
= 12 / ( 3 x 5 ) x 100
= ( 12/15) x 100
= 80%
=60 minutes/ 24 units
= 2.5 minutes/ unit
This will be possible by :
Deploying 2 workers at resource 1 which will make effective processing time = 5 minutes/ 2 workers = 2.5 minutes/ worker
Deploying 2 workers at resource 3 which will make effective processing time = 5 minutes/ 2 workers = 2.5 minutes / worker
There is no need of deploying additional manpower at resource 2 since its processing time of 2 minutes/ unit is already less than takt time of 2.5 minutes/ unit
Therefore target manpower
= 2 ( resource 1 ) + 1 ( resource 2 ) + 2 ( resource 3 )
= 5
Target manpower = 5
Cost of direct labour = $2.75 / unit
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