Suppose an engineer who recognized the importance of elevating the constraint pr

Question

Suppose an engineer who recognized the importance of elevating the constraint presented the following proposal to modify the system:

Buy some additional equipment and decrease work center C’s operation time on both RM1 and RM2 by 50% each at the cost of $200,000. Also, reduce work center B’s operation time on RM2 by 40% at the cost of $50,000. The above modification on work center C in (i) and B in (ii) requires increase in   work center D’s operation time by 2 minutes/unit for both products P and Q at no additional cost.

Discuss if the engineer’s proposal is feasible. If it is implemented, how much profit would be expected?

(4) Consider a small production system for manufacturing two products, P and Q, as shown below. The goal of this system is to maximize profit. Demand per week Sellimg price Raw material costs 110 units $110 unit 70 units $75/unit $20 unit S24/unit RM1 RM2 RM3 Purchased $24/unit $20 unit S5/unit 2,400 mimutes each Time available on work centers (A, B, C, and D): Operating expenses per week: Supply of raw materials and purchased parts: Unlimited S6,000/week (10mm unit) (5mnunit) Purchased (12mim unit) (10mm unit) (9mn unit) (14mm unit) (10mm unit) (10mm unit) RM3

Explanation / Answer

Suppose an engineer who recognized the importance of elevating the constraint presented the following proposal to modify the system:

Buy some additional equipment and decrease work center C’s operation time on both RM1 and RM2 by 50% each at the cost of $200,000. Also, reduce work center B’s operation time on RM2 by 40% at the cost of $50,000. The above modification on work center C in (i) and B in (ii) requires increase in   work center D’s operation time by 2 minutes/unit for both products P and Q at no additional cost.

Discuss if the engineer’s proposal is feasible. If it is implemented, how much profit would be expected?

-------------------------------------------------------------------------------------------------------------------------------------------------------------------

Answer :

Given Information :

An Engineer who recognized the importance of elevating the constraint presented the following proposal to modify the system:

Change in system for minimizing the constraints .

1 ) Buy some additional equipment and decrease work center C’s operation time on both RM1 and RM2 by 50% each at the cost of $200,000.

2 ) Also, reduce work center B’s operation time on RM2 by 40% at the cost of $50,000.

The above modification on work center C in (i) and B in (ii) requires increase in   work center D’s operation time by 2 minutes/unit for both products P and Q at no additional cost.

Profit Structure :

New Timings :

For Product P :

Time per unit =

Previously this time was = 36 min / unit

For Product Q =

Previously this time was = 24 min /unit

Now if we see carefully then there is time reduction in product P , but increase in product Q.

From above information we can conclude that

1) Product P can go with Engineers proposals

2)For Product Q engineers proposals need to be changed as in new case timing is increasing. We.We have limitation about time .Only 2400 min / week

3)Though the addition of operations in D are not generating any cost but they need extra time, which is affecting on product Q time structure.

So up gradation need for Product Q.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------

Tentative profit is shown in table no 1.

P Q Demand Per week 110 70 Selling Price $110/unit 12100 $75/unit 5250 Raw Material 1 $ 20/unit 2200 Raw Material 2 $24/unit 2640 $24/unit 1680 Raw Material 3 $ 20/unit 1400 Purchased Part $ 5/unit 550 Profit 6710 2170

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.