12. A manufacturing process has 3 pieces of equipment – A, B, and C. The manufac

Question

12. A manufacturing process has 3 pieces of equipment – A, B, and C. The manufacturing process begins at equipment A, continues through equipment B and then flows through equipment C. Goods are complete after equipment C processing. Manufacturing engineers are proposing an expenditure of $100,000 to double the capacity of equipment B.

a. What additional information would you need to have in order to describe whether to make the expenditure?

b. What type of analysis would you need to do in order to describe whether to make the expenditure?

Explanation / Answer

a. The additional information required are:-

1. What is the bottleneck in the whole process?

2. Will increasing the capacity of equipment will actually impact the overall production in a favourable way?

3. Is there any demand that can justify the increase in capacity?

4. Increasing the capacity of equiment B will cost $100,000. Will it also demand any increase in cost for equipment A and C?

5. Do we have financial and what will be the budget source for capacity increase.

b. Cost Value benefit analysis is required.

Capacity planning

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