A plant manager plans to purchase new workstations. He has three choices and the
ID: 443523 • Letter: A
Question
A plant manager plans to purchase new workstations. He has three choices and their prices are listed below. The new workstation will be used to produce three products. The annual demands for the three products and their processing times on each type of workstations are as the following. Assume that workstations operate 8 hours a day and 250 days a year. The only cost considered is the workstation purchasing cost. Only one type of workstations can be purchased. Which workstation should be purchased and how many of that workstation would be needed? If the following operating costs are considered, what should be the answer in a)? Assume that the purchase costs for workstations are annual costs. Assume that the given workstation purchase costs are for the life of three years, the operating costs for each of the workstations remain the same, and all the processing times and demands also remain the same. Which workstation should be purchased and how many of that workstation would be needed assuming that the demands for all three products remain the same for three years?Explanation / Answer
Solution :
a) If the only cost to be considered is the work station purchasing cost , then work station B is to be purchased as this is the cheapest workstation of all the three . The total annual demand of all the three products is 52,000 units .
If work station B is purchased then in 1 hour it produces 4 units of A , 4 units of B and 3 units of C . In total machine B produces 11 units of products .
In 8 hours and 250 days , Machine B produces = 22,000 units consisting of both A&b&C.
If three machine are employed then 2 machines produce 44,000 units and the thrid machine will produce 8,000 units. To produce 8000 units working 8 hours a day it requires 90.90 days .
Therefore 3 machines of B should be purchased because in total 52,000 units is to be produced .
b) The total cost of work station A = $ 56,000 + $ 15 X 8 X 250 = $ 86,000
The total cost of work station B = $ 42,000 + $ 15 X 8 X 250 = $ 72,000
The total cost of work station C = $ 80,000 + $ 15 X 8 X 250 = $ 110,000
Product Annual demand Processing Time A B C 1 15000 5 6 4 2 12000 6 6 5 3 25000 3 4 2 Total 52000 14 16 11Related Questions
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