Consider a 5-step process that includes cutting, drilling, stamping, welding, an

Question

Consider a 5-step process that includes cutting, drilling, stamping, welding, and painting. The cutting department has two machines that each process materials at a rate of 25 units per hour. Drilling has four machines that each process material at a rate of 12 units per hour. Stamping has six machines that each process material at a rate of 10 units per hour. Welding has three machines that each process materials at a rate of 15 units per hour. Painting has five machines that each process materials at a rate of 10 units per hour You've been charged with improving the throughput of the process. Your CFO has given you a maximum budget of $200,000 for capita at least a 10% improvement in capacity. 1. Cutting machines cost $80,000 each 2. Drilling machines cost $60,000 each 3. Stamping machines cost $30,000 each 4. Welding machines cost $120,000 each 5. Painting machines cost $100,000 each budget Purchase three new machines

Explanation / Answer

Cutting = 2 machines and each produces 25 units per hour. So, Output = 2*25 = 50 units per hour

Drilling = 4 machines and each produces 12 units per hour. So, Output = 4*12 = 48 units per hour

Stamping = 6 machines and each produces 10 units per hour. So, Output = 6*10 = 60 units per hour

Welding = 3 machines and each produces 15 units per hour. So, Output = 3*15 = 45 units per hour

Painting = 5 machines and each produces 10 units per hour. So, Output = 5*10 = 50 units per hour

So, current level of output is basis the bottleneck process which is Welding.

For at least 10% improvement in capacity, output should increase from 45 to 49.5.

Hence, need to add machines for both Drilling and Welding

Total budget required = 60,000 + 120,000 = 180,000

By adding one machine for each process, there capacity will change to:

Drilling = 5*12 = 60 units per hour and Welding = 4*15 = 60 units per hour

Then, new capacity will be 50 units per hour basis Cutting and Painting operation

Hence,

Cutting = Purchase no new machine

Drilling = Purchase one new machine

Stamping = Purchase no new machine

Welding = Purchase one new machine

Painting = Purchase no new machine

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