A company manufactures a product using machine cells. Each cell has a design cap

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 220 units per day. Annual demand is currently 50,000 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 245 workdays per year. (Round up your answer to the next whole number.)

Explanation / Answer

Current annual demand = 50000 units

Future annual demand = 50000 × 3 = 150,000 units

Future output per cell per annum = 220 / day × 245 days = 53900

Number of cells company should acquire

= future annual demand / output per cell per annum

= 150000/53900

= 2.78 ( 3 rounded to next higher whole number )

COMPANY SHOULD ACQUIRE 3 CELLS TO SATISFY PREDICTED DEMAND

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