Consider a process consisting of three resources. Assume there exists unlimited

Question

Consider a process consisting of three resources. Assume there exists unlimited demand for the product.

Resource 1 has a processing time of 4 minutes per unit.

Resource 2 has a processing time of 3 minutes per unit.

Resource 3 has a processing time of 2 minutes per unit.

All three resources are staffed by 1 worker and each worker gets paid $11 per hour.

a. What is the cost of direct labor?

b. What is the labor content?

c. How much idle time does the worker at resource 3 have per unity?

d. What is the average labor utilization?

e. Assume the demand rate is 15 units per hour. What is the take time?

f. Assume the demand rate is 15 units per hour. What is the target manpower?

Explanation / Answer

The maximum processing time is for resource 1 and hence it is the bottleneck. The flow rate is 60 / 4 = 15 per hour.

(a)

Cost of direct labor = total wages per hour divided by the flow rate

= (3 x $11) / 15

= $2.2 per unit

(b)

The total labor content = sum of all process steps' time = 4+3+2 = 9 minutes

(c)

The cycle time of the entire system will be equal to that of the bottleneck i.e. 4 minutes. So, idle time per unit flow for resource 3 will be 4 - 2 = 2 minutes.

(d)

Utilization = Total labor content / (3 * cycle time) = 9 / (3*4) = 75%

(e)

Tact time = 60 / 15 = 4 minutes

(f)

Target manpower = Total labor content / tact time = 9 / 4 = 2.25

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