Problem 5-9 A company manufactures a product using machine cells. Each cell has

Question

Problem 5-9 A company manufactures a product using 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 228 units per day. Annual demand is currently 80.000 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 that no cells currently exist. Assume 241 workdays per year (Round up your answer to the next whole number.) points

Explanation / Answer

Current annual demand = 80,000 units

Projected annual demand within 2 years = 80000*3 = 2,40,000 units

Output per cell per day after productivity improvement = 228 units

Number of workdays in an year = 241

Annual output per cell after productivity improvement = 228*241 = 54,948 units

Number of cells that the company must acquire = 2,40,000 / 54,948 = 4.36 or 5

So the company must plan to acquire 5 cells in order to satisfy the projected annual demand within 2 years.

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