Another problem is the labor cost are too high and the lines may not be efficien

Question

Another problem is the labor cost are too high and the lines may not be efficient. The planned production is an 8 hour shift, but the company has been running a 10 hour shift. The organization wants to know if it is feasible to have 2 runners or can the process be more efficient without them? Calculate the production, cost and labor for each line. What can be done to reduce the labor? What can be done to make the process more efficient? [recalculate without runners] Data for Problem #2 Set up cost for the phones are 25.50. The demand varies for each type of phone: T100 - 20; T200 - 25; T300 - 45; T300 - 10. The safety stock for the phones area: T100 - 5; T200 - 5; T300 - 20; T300 - 5. Holding cost is 3%. Cycle times for line #1 [20, 30, 35, 15, 17, 23, 30, 35, 16, 40] - these are also the actual time for production. Cycle times for line #2 [20, 30, 38, 16, 19, 20, 32, 37, 17, 45] - - these are also the actual time for production. Overhead cost is 13; Planned overhead is 10; Profit is 20; selling price is 100. Actual unit gross profit is 11, direct labor is 500 and units produced =2000.

Explanation / Answer

Solving the exercise:

Well, In order to calculate the production that means The work in process WIP:

WIP= TH.CT   where:

WIP: Work in Process illustrates the parts in production line.

TH: Throughput (TH) means the production that comes out of the line. Usually products/hour.

CT: Production time, cycle time or throughput time illustrates the time that product spends in the production line. It is the time that parts are in WIP condition. From the time they are taken into the production all the way until they are ready.

In this case, We already know that CT and WIP is known. So we need to work out the TH that means production too. But Remeber we have the production time (CT) in each station but we do not have the work in process (WIP) in each station. We have olny 2000 units produced. In order to estimate the TH and each station, We assume that eah station produces the same number of units each one. Therefore:

1 station produce= 2000units/10 stations=200 units/station

Now, WIP= TH.CT but, clearing TH:

TH= (WIP/CT)

Replacing int the of the line number 1:

TH1a (on the station 1 but line 1)= (200 units/20 s)= 10 units/s come out in the station number 1 on the line number 1.

TH3b (on the station 3 but line 2)= (200 units/38 s)= 5.26 units/s=5 units/s come out in the station number 3 on the line number 2.

Consequenlty:

Note: I recommend normalize the values as many of these have been rounded.

Conclussion: according to the chart above. The two lines are almost efficient equivalately because they almost produce the same number of units in each station.

What can be done to reduce the labor?

In order to reduce the labor the labor, It is necessary to do some invegation in order to determinate the number of workers needed in each station. That is to say, optimize the process.

What can be done to make the process more efficient?

In order to make the process more efficient it is necessary to select only one line or if the company wants to increase the number of unit prodcuced they could work with the two lines. Maybe If the company wants to do the more efficient they can investigate if reducing the number of station but maintaining the two lines could be more efficient than only work with one line of productio.

Finally the calculation of ending work in process is:

Beginning WIP + Manufacturing costs - Cost of goods manufactured
= Ending work in process

So, now you are able to estimate the cost and labor for each line.

I hope my explanation has been useful for you.

Good luck!

Station TH on line 1 (units/s) TH on line 2 (units/s) 1 10 10 2 7 7 3 6 5 4 13 13 5 12 11 6 9 10 7 7 6 8 6 5 9 13 12 10 5 4

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