Identifying and Exploiting Constraints, Constraint Elevation Confer Company prod
ID: 430623 • Letter: I
Question
Identifying and Exploiting Constraints, Constraint Elevation
Confer Company produces two different metal components used in medical equipment (Component X and Component Y). The company has three processes: molding, grinding, and finishing. In molding, molds are created, and molten metal is poured into the shell. Grinding removes the gates that allowed the molten metal to flow into the mold’s cavities. In finishing, rough edges caused by the grinders are removed by small, handheld pneumatic tools. In molding, the setup time is one hour. The other two processes have no setup time required. The demand for Component X is 700 units per day, and the demand for Component Y is 1,020 units per day. The minutes required per unit for each product are as follows:
The company operates one eight-hour shift. The molding process employs 24 workers (who each work eight hours). Two hours of their time, however, are used for setups (assuming both products are produced). The grinding process has sufficient equipment and workers to provide 418 grinding hours per shift.
The Finishing Department is labor intensive and employs 72 workers, who each work eight hours per day. The only significant unit-level variable costs are materials and power. For Component X, the variable cost per unit is $41, and for Component Y, it is $52. Selling prices for X and Y are $91 and $121, respectively. Confer’s policy is to use two setups per day: an initial setup to produce all that is scheduled for Component X and a second setup (changeover) to produce all that is scheduled for Component Y. The amount scheduled does not necessarily correspond to each product’s daily demand.
Required:
1. Calculate the time (in minutes) needed each day to meet the daily market demand for Component X and Component Y.
What is the major internal constraint facing Confer Company?
Molding
2. Describe how Confer should exploit its major binding constraint. Specifically, identify the product mix that will maximize daily throughput.
3. Assume that manufacturing engineering has found a way to reduce the molding setup time from one hour to 10 minutes. How many units of Component X and Component Y would be produced?
Minutes Required per Unit of Product Product Molding Grinding Finishing Component X 5 10 15 Component Y 10 15 20Explanation / Answer
1) Time (in minutes) needed each day to meet the daily market demand for Component X and Component Y
Molding = 700*5 + 1020*10 = 13700 minutes
Grinding = 700*10 + 1020*15 = 22300 minutes
Finishing = 700*15 + 1020*20 = 30900 minutes
Time available in Molding = 24*(8-2) = 144 hours or 8640 minutes
Time available in Grinding = 418 hours or 25080 minutes
Time available in Finishing = 72*8 = 576 hours or 34560 minutes
Net time required in Molding is greater than available time. Therefore Molding is the major constraint (bottleneck).
2) Contribution margin from component X = 91-41 = 50
Contribution margin from component Y = 121-52 = 69
Contribution margin from component X per minute of bottleneck process (Molding) = 50/5 = 10
Contribution margin from component Y per minute of bottleneck process (Molding) = 69/10 = 6.9
Component X has higher contribution margin per minute of Molding time. Therefore, production of X should be given priority. Net time available in Molding after production of 700 units of component X = 8640 - 700*5 = 5140 minutes
Number of units of component Y that can be produced in 5140 minutes = 5140/10 = 514 units
3) Net time available in Molding = 24*(8-20/60)*60 = 10580 minutes
Net time available after production of 700 units of component X = 10580-700*5 = 7080 minutes
Number of units of component Y that can be produced = 7080/10 = 708 units
Number of Units produced Component X 700 Component Y 514Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.