TUTORIAL 2 – 16 -09- 2014 OPERATIONS MANAGEMENT CHAPTER 7 – Process Design | CHAPTER 7S – Capacity Planning
PROBLEM 1 Creative Cabinets, Inc., needs to choose a production method for its new office shelf, the Maxistand. To help accomplish this, the firm has gathered the following production cost data:
Process Type
Annualized Fixed Cost of
Variable Costs (per unit) ($)
Plant & Equipment ($)
Labor
Material
Energy
Mass Customization
1,260,000
30
18
12
Intermittent
1,000,000
24
26
20
Repetitive
1,625,000
28
15
12
Continuous
1,960,000
25
15
10
Creative Cabinets projects an annual demand of 24,000 units for the Maxistand. The Maxistand will sell for $120 per unit. a. Which process type will maximize the annual profit from production the Maxistand? b. What is the value of this annual profit?
PROBLEM 2 (MID-TERM 2013) As a prospective owner of a club known as the Red Rose, you are interested in determining the volume of sales dollars necessary for the coming year to reach the break-even point. You have decided to break down the sales for the club into four categories, the first category being beer. Your estimate of the beer sales is that 50,000 drinks will be served. The selling price for each unit will average $2; the cost is $1. The second major category is meals, which you expect to be 15,000 units, but with an average price of $10 and a cost of $6. The third major category is desserts and wine, of which you also expect to sell 10,000 units, but with an average price of $3 per unit sold and a cost of $2 per unit. The final category is lunches and inexpensive sandwiches, which you expect to total 30,000 units at an average price of$6.5 with a food cost of $3.5. Your fixed cost (rent, utilities, and so on) is $2,000 per month plus $3,000 per month for entertainment. ente rtainment. a. What is your break-even point in dollars per month? b. What is the expected number of meals each day if you are open 30 days a month?
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PROBLEM 3 (UTS 2014) Cepat Beres Shop is a specialized repair shop for trucks. This shop has a repairing capacity of 800 trucks per month. Because of maintenance for equipment and machinery should be scheduled every month, the owner of PT Cepat Beres feels that his shop is only capable of repairing up to 600 trucks per month. Last month, 2 employees left the shop for a few days, so that only 400 trucks were completely repaired. What is the utilization and efficiency of the Cepat Beres Shop?
PROBLEM 4 A production process at Kenneth Day Manufacturing is shown in figure below. The drilling operation occurs separately from, and simultaneously with, the sawing and sanding operations. A product needs to go through only one of the three assembly operations (the operations are in parallel).
a. Which operation is the bottleneck? b. What is the process time of the overall system? c. What is the process cycle time of the overall system? d. If the firm operates 8 hours per day, 20 days per month, what is the monthly capacity of the manufacturing process? e. Suppose that a second welding machine is added, and it has the same process time as the original welding machine. (i) What is the new process time of the system? (ii) What is the new process cycle time?
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