For this homework assignment, assume that you have your firm starting the first

Question

For this homework assignment, assume that you have your firm starting the first month as in the EXTENDED simulation, with a capacity of 24,000 boxes per day and 8 hours setup time. Assume that you have enough materials in stock that you can produce continuously as long as you reorder at the right times. Please use the assignment template to complete your analysis and answer these questions.

This is an individual assignment. This is a manual assignment, not using SAP.

(24 pts) Scenario: Your forecast is for 76,000 boxes of each of six 1Kg products every 20 days.

Assume that you produce all you need of each product in sequence using long production runs. That is, you produce 76k boxes of product 1, then 76k boxes of product 2, and so forth.

Without changing the setup time, what capacity will you need to make your forecast for the current round and also all subsequent rounds?

Without changing capacity, what would the setup time need to be in order to meet your forecast each round?

What is the production efficiency for the solution of part b?

What is the production efficiency for the solution of part c?

What is the cost to implement the capacity improvement of part b?

What is the cost to implement the setup time reduction in part c?

Assuming you can sell the boxes for the same price either way, which solution would you implement and what is your rationale?

Explanation / Answer

Part a question seems to be missing, hence the 1st question is assumed to be b. Only, in that case, I have an option b and an option c to answer 3rd and 4th part.

b) We produce 6 products in 20 days. Hence, production time for 76K of each product = 20/6 = ~ 3 days

In 3.3 days, we need to produce the 76K product, hence capacity required = 76K/3 = 25333 = ~ 25334 (considering product would be a whole number)

c) Set-up time calculation

Set-up time required to meet production of 76K products = Days available per product - Days required to produce at current capacity = (20/6) - (76000/24000) = 0.16 days = 3.84 hours = ~4 hours

d) Total production possible per product = Production / day * Number of days available per product = 25334*(20/6) = 84447

Production efficiency = Quantity produced / Total production possible = 76000/84447 = 89.99%

e) Total production possible per product = 24000*(20/6) = 80000

Production efficiency = 76000/80000= 95%

There is no information on the cost ($) to implement increased capacity and cost ($) to implement improved set-up time.

f) Assume the cost to increase the capacity of production by one unit is "X". Then, total cost to improve capacity = (25334-24000)* X = 1334 X

g) Assume Cost to improve set-up time by one hour is X, then cost to implement new set-up time is 4X

h) I will choose the option depending on cost required for improvement. If 1334X > 4X then I will choose option b i.e. capacity improvement and if 4X>1334X I will choose option C.

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