Fiberform Industries produces a line of motorboats. The assembly department prog

Question

Fiberform Industries produces a line of motorboats. The assembly department programs computerized equipment to shape and bend the metal railings for each boat. This equipment is capable of producing 40 railings per hour. The department typically produces only 30 railings per hour. The plant operates two (8-hour) shifts, 6 days a week. The shape and bend of the railings are critical, and the firm currently discards 9,600 completed railings a year because of poor shape and bend. The plant is closed for 12 vacation days and 10 holidays per year. The equipment is also shut down for one day every 2 months for regular maintenance. The assembly department’s average production of good railings for the past 5 years is 130,000 a year. The department expected to produce 120,000 good boat railings this year. However, the actual production was 105,000 railings. For this problem, assume the 365th day is a Sunday. Further assume any difference between actual sales and production under current conditions is idle marketable capacity.

1. Using the CAM-I model, determine the amount of equipment time that falls into each of the following categories: (i) rated; (ii) idle; (iii) nonproductive; and (iv) productive. As part of your solution attempt to determine what types of idle and nonproductive capacity exists. (Note: You may have to back into one type of idle capacity.)

Explanation / Answer

i) Rated time equipment is taking in producing railings are:

Plant operating days is 6 days in a week 53 weeks (as 365th is a sunday) = 6*53 = 318 days

Less :Normal Idle time: Shut down (6 days)

Vacation (12 days)

Holidays (10 days)

Total 290 days

Equipment works on 2 shifts for 8 hours each, total rated time an equipment take to produce railing =290 days *8*2 = 4640 Hours

ii) Normal Idle time : Shut down = 6 days , vacation for 12 days and holidays of 10 days =28 days *8*2 = 448 hours

iii) Non productive capacity:

Plant capacity to produce 40 railing per hour

Actually produces 30 railing per hour

Non Productive capacity = 40-30 hours =10 hours* 8*2*6*53 =50880 hours

Non productive capacity is also abnormal idle time which may occurs due to machine breakdown, long time failur of power,sudden strike or lockout etc.

iv) Productive capacity

Actual Plant produces =30 railing * 290 days *8 hours *2 shifts = 139200

Less Scrap during the year: (9600)

Actual Sales 129600

Actual Production in the year 105000

Idle marketable capacity =(129600-105000) 24600

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