Gent Softies Ltd is a company based in Lusaka, and specializes in the production

Question

Gent Softies Ltd is a company based in Lusaka, and specializes in the production of bottled soft drinks. Due to favorable market share of its products, the company wishes to diversify by introducing another new brand of a soft drink called Swish, yet to de designed and launched.

You have just been engaged as a management trainee in the production and operations management department of the company. Advise management on the need for:

Capacity planning                                                                    

Gent Softies is specialized in the production of 500 ml bottle of Swish drink:                              

The factory has been designed to produce 500 ml bottle at the rate of 900 crates per hour

The production line operates 7 days per week of three 8 – hour shift per day.

The effective capacity is 132,000 crates. For the month January 2016 the facility produced 112,000 crates.

          Calculate:

Design capacity                                                     

Utilization                                                             

Efficiency                                                              

Evidently, the 500 ml bottle of Swish drink has proved popular on the market. To meet the increasing demand, the operations manager intends to add on a second production line:

The effective capacity on the second line will remain the same as the first line.

Output on the second line is expected to be less at no more than 75% efficiency. This is mainly due to the crew hired being new and inexperienced.

Calculate the expected output on the second line.

Explanation / Answer

Design capacity ( monthly )

= 900 crates per hour x 24 hours/day x 31 days ( for January)

Effective capacity = 132,000 crates

Actual production in January = 112,000 crates

Utilization

= Actual production / Design capacityx 100

= 112000/ 669600x 100

= 16.73 % ( rounded to 2 decimal places )

Efficiency

= Actual production / Effective capacity x 100

= 112000/132000 x 100

= 84.85% ( rounded to 2 decimal places )

Expected output of the same line is going to have maximum 75% efficiency.

Thus, as per above formula ,

75 = Expected output / Effective capacity x 100

Or, 75 = Expected output / Effective capacity x 100

Or, 75 = Expected output/ 132,000 x 100

Or, Expected output = 0.75 x 132,000

Or, Expected output = 99,000

EXPECTED OUTPUTON THE SECOND LINE = 99,000

EXPECTED OUTPUTON THE SECOND LINE = 99,000

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