PRODUCTION AND

OPERATIONS MANAGEMENT
ASSIGNMENT NO: 4
PROBLEM S7.1 Amy Xia’s plant was designed to produce 7,000 hammers per day but is limited to making
6,000 hammers per day because of the time needed to change equipment between styles of hammers. What
is the utilization?

SOLUTION

Actual: 6000 hammers per day

Design: 7000 hammers per day

Utilization: 6000/7000 = 0.875 (85.7%)

PROBLEM S7.2 For the past month, the plant in Problem S7.1, which has an effective capacity of 6,500, has
made only 4,500 hammers per day because of material delay, employee absences, and other problems. What
is its efficiency?

SOLUTION

EFFECTIVE = 6500 hammers per day

Actual = 4500 hammers per day

Efficiency = 4500/6500 = 0.692 (69.2%)

PROBLEM S7.3 If a plant has an effective capacity of 6,500 and an efficiency of 88%, what is the actual
(planned) output?

SOLUTION

Effective = 6500

Efficiency = 88%

Actual = 6500*0.88 = 5720 units

PROBLEM S7.4 A plant has an effective capacity of 900 units per day and produces 800 units per day with
its product mix; what is its efficiency?

SOLUTION

Effective = 900 units per day

Actual = 800 units per day

Efficiency = 800/900 = 0.88 (88%)

PROBLEM S7.5 Material delays have routinely limited production of household sinks to 400 units per day. If
the plant efficiency is 80%, what is the effective capacity?

SOLUTION

Actual = 400 units per day

Efficiency = 80%

Effective = 400/0.8 = 500 units per

PROBLEM S7.6 The effective capacity and efficiency for the next quarter at MMU Mfg. in Waco, Texas, for
each of three departments are shown:

DEPARTMENT EFFECTIVE CAPACITY RECENT EFFICIENCY

Design 93,600 .95

Fabrication 156,000 1.03

Finishing 62,400 1.05

Compute the expected production for next quarter for each department

SOLUTION

Design Fabrication Finishing

Effective: 93600 156000 62400

Efficiency: 0.93 1.03 1.05

Actual/Effective: - Effective*Efficiency

88.920 units 160680 units 65520 units

PROBLEM S7.7 Southeastern Oklahoma State University’s business program has the facilities and faculty to
handle an enrollment of 2,000 new students per semester. However, in an effort to limit class sizes to a
“reasonable” level (under 200, generally), Southeaster’s dean, Holly Lutze, placed a ceiling on enrollment of
1,500 new students. Although there was ample demand for business courses last semester, conflicting
schedules allowed only 1,450 new students to take business courses. What are the utilization and efficiency
of this system?

SOLUTION

Design Capacity = 2000

Effective = 1500

Actual = 1450

Utilization = Actual/Design = 1450/2000 = 72.5%

Efficiency = Actual/Effective = 1450/1500 = 97%

S7.8 Under ideal conditions, a service bay at a Fast Lube can serve 6 cars per hour. The effective capacity and
efficiency of a Fast Lube service bay are known to be 5.5 and 0.880, respectively. What is the minimum
number of service bays Fast Lube needs to achieve an anticipated servicing of 200 cars per 8-hour day?

The computation of the minimum number of service bays is shown below:

But before that first we have to find out the effective capacity and one day capacity which is

Effective Capacity is

= 5.5 cars per hours × 0.88

= 4.84 cars

Now one day capacity for one service bay is

= 4.84 cars × 8 hours

= 38.72 cars

So, to produce 200 cars, the minimum number of service bays is

= 200 cars ÷ 38.72

= **5 service bays **

• S7.9 A production line at V. J. Sugumaran’s machine shop has three stations. The first station
can process a unit in 10 min utes. The second station has two identical machines, each of which
can process a unit in 12 minutes. (Each unit only needs to be pro cessed on one of the two
machines.) The third station can process a unit in 8 minutes. Which station is the bottleneck
station?

1. Station 1:

o Processes 1 unit in 10 minutes.

o Therefore, its processing rate is 1 unit / 10 minutes.

2. Station 2:

o Has two identical machines, each processing 1 unit in 12 minutes.

o Since there are two machines working in parallel, the combined processing time
for this station is effectively halved.

o To calculate the rate of the two machines we can add the rates of each machine.

o rate of one machine = 1 unit / 12 minutes.

o rate of two machines = (1 unit / 12 minutes) + (1 unit / 12 minutes) = 2 units / 12

minutes = 1 unit / 6 minutes.

o Therefore, Station 2 processes 1 unit in 6 minutes.

3. Station 3:

o Processes 1 unit in 8 minutes.

o Therefore, its processing rate is 1 unit / 8 minutes.

Comparison

To identify the bottleneck, we want to find the station with the longest processing time per
unit, or the slowest rate.

 Station 1: 10 minutes/unit

 Station 2: 6 minutes/unit

 Station 3: 8 minutes/unit

Conclusion
Station 1, with a processing time of 10 minutes per unit, is the bottleneck station

S7.10: A work cell at Chris Ellis Commercial Laundry has

a workstation with two machines, and each unit produced at the station needs to be processed
by both of the machines. (The same

unit cannot be worked on by both machines simultaneously.)

Each machine has a production capacity of 4 units per hour.

What is the throughput time of the work cell?

 Time per Unit per Machine:

 If a machine processes 4 units per hour, it takes 60 minutes / 4 units = 15 minutes to

process one unit.

 Total Time per Unit (Both Machines):

 Since each unit needs to go through both machines, the total time is 15 minutes + 15
minutes = 30 minutes.

 Throughput Time:

 The throughput time is the total time it takes for a unit to go through the work cell,
which is 30 minutes.
What is the bottleneck time of the system?

It can be referred that the time each unit produced at 3 stations is

-Station 1 :

Machine A: it takes 60 minutes to process 20 units

1 unit needs 3 minutes

Machine B: it takes 60 minutes to process 20 units

1 unit needs 3 minutes

-Station 2 : it takes 60 minutes to process 5 units

1 unit needs 12 minutes

-Station 3 : it takes 60 minutes to process 12 units

1 unit needs 5 minutes

The stage that takes the most time to process compared to others

is Station 2, 1 unit needs 12 minutes. Therefore, the bottleneck

time of the system is 12 minutes.

b. What is the bottleneck station of this work cell?

-The bottleneck station of this work cell is Station 2.

c. What is the throughput time?

-The throughput time of the system: 3 + 12 + 5 = 20 minutes

d. If the firm operates 10 hours per day, 5 days per week, what is

the weekly capacity of this work cell?

-Weekly available time of this work cell is:

60 x 10 x 5 = 3000 minutes

S7.14:
Klassen Toy Company, Inc., assembles two parts

( parts 1 and 2 ): Part 1 is first processed at workstation A for

15 minutes per unit and then processed at workstation B for 10 minutes per unit. Part 2 is
simultaneously processed at work

station C for 20 minutes per unit. Work stations B and C feed the

parts to an assembler at workstation D, where the two parts are

assembled. The time at workstation D is 15 minutes.

a) What is the bottleneck of this process?

b) What is the hourly capacity of the process?

 Part 1:

o Workstation A: 15 minutes/unit

o Workstation B: 10 minutes/unit

 Part 2:

o Workstation C: 20 minutes/unit

 Assembly:
 o Workstation D: 15 minutes/assembly (1 assembly = 1 unit of part 1 + 1 unit of
part 2)

a) Finding the Bottleneck

1. Workstation A:

o Processes 1 unit of Part 1 in 15 minutes.

2. Workstation B:

o Processes 1 unit of Part 1 in 10 minutes.

3. Workstation C:

o Processes 1 unit of Part 2 in 20 minutes.

4. Workstation D:

o Assembles 1 unit in 15 minutes. However, workstation D needs 1 unit from

workstation B and 1 unit from workstation C. Therefore, the rate of workstation
D is dependant on the slowest of B and C.

To find the bottleneck, we need to consider the flow of the parts and the assembly process.

 Part 1 needs to go through A and B.

 Part 2 needs to go through C.

 Both parts meet at D.

Comparing the processing times:

 Workstation A: 15 minutes

 Workstation B: 10 minutes

 Workstation C: 20 minutes

 Workstation D: 15 minutes.

Workstation C has the longest processing time (20 minutes per unit of Part 2). Therefore,
Workstation C is the bottleneck.

b) Calculating the Hourly Capacity

1. Bottleneck Rate:
 o Workstation C processes 1 unit of Part 2 in 20 minutes.

2. Hourly Capacity:

o To find the hourly capacity, we can calculate how many units Workstation C can
process in 60 minutes.

o 60 minutes / 20 minutes per unit = 3 units per hour.

Since Workstation C is the bottleneck, the entire process can only produce at the rate of
Workstation C.

S7.16 Smithson Cutting is opening a new line of scissors for supermarket distribution. It
estimates its fixed cost to be $500.00 and its variable cost to be $0.50 per unit. Selling price is
expected to average $0.75 per unit. a) What is Smithson’s break-even point in units? b) What is
the break-even point in dollars?

Given Information

 Fixed cost (FC) = $500.00

 Variable cost per unit (VC) = $0.50

 Selling price per unit (SP) = $0.75

a) Break-Even Point in Units

The formula for the break-even point in units is:

Break-Even Point (Units) = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)

Let's plug in the values:

Break-Even Point (Units) = $500.00 / ($0.75 - $0.50) Break-Even Point (Units) = $500.00 / $0.25
Break-Even Point (Units) = 2000 units

Therefore, Smithson's break-even point is 2000 units.

b) Break-Even Point in Dollars

The formula for the break-even point in dollars is:

Break-Even Point (Dollars) = Break-Even Point (Units) * Selling Price per Unit
Let's plug in the values:

Break-Even Point (Dollars) = 2000 units * $0.75 Break-Even Point (Dollars) = $1500.00

Therefore, Smithson's break-even point is $1500.00

S7.17 Markland Manufacturing intends to increase capac ity by overcoming a bottleneck

operation by adding new equip ment. Two vendors have presented proposals. The fixed costs
for proposal A are $50,000, and for proposal B, $70,000. The variable cost for A is $12.00, and
for B, $10.00. The revenue generated by each unit is $20.00. a) What is the break-even point in
units for proposal A? b) What is the break-even point in units for proposal B?
S7.17: a) What is the break-even point in dollars for proposal A if you add $10,000 installation
to the fixed cost? b) What is the break-even point in dollars for proposal B if you add $10,000
installation to the fixed cost?
S 7.20: Janelle Heinke, the owner of Ha’Peppas!, is consider ing a new oven in which to bake
the firm’s signature dish, vegetar ian pizza. Oven type A can handle 20 pizzas an hour. The fixed
costs associated with oven A are $20,000 and the variable costs are $2.00 per pizza. Oven B is
larger and can handle 40 pizzas an hour. The fixed costs associated with oven B are $30,000 and
the variable costs are $1.25 per pizza. The pizzas sell for $14 each. a) What is the break-even
point for each oven? c) If the owner expects to sell 12,000 pizzas, which oven should she
purchase? d) At what volume should Janelle switch ovens?
S7.20: You are considering opening a copy service in the student union. You estimate your fixed
cost at $15,000 and the variable cost of each copy sold at $.01. You expect the selling price to
average $.05. a) What is the break-even point in dollars? b) What is the break-even point in
units?