A company manufactures a product using machine cells. Each cell has a design cap
ID: 397132 • Letter: A
Question
A company manufactures a product using machine cells. Each cell has a design capacity of 250 units per day and an effective capacity of 230 units per day. At present, actual output averages 200 units per cell, but the manager estimates that productivity improvements soon will increase output to 228 units per day. Annual demand is currently 80,000 units. It is forecasted that within two years, annual demand will triple. How many cells should the company plan to acquire to satisfy predicted demand under these conditions? Assume that no cells currently exist. Assume 241 workdays per year.
Explanation / Answer
Solution:
Current Annual demand = 80,000 units
Projected Annual demand = 240,000 units (Annual demand will triple)
Increased output = 228 units per day
Number of working days = 241 workdays per year
Annual capacity per cell = Increased output x Number of working days
Annual capacity per cell = 228 x 241 = 54,948 units
Number of cells required is calculated as,
Number of cells = Projected Annual demand / Annual capacity per cell
Number of cells = 240,000 / 54,948
Number of cells = 4.37 or 5 (Rounding off to the next whole number)
Number of cells = 5
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