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 227 units per day. Annual demand is currently 70,000 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.)

Cells __________

Explanation / Answer

Cells: 4

yearly capacity / cell no of cells needed (D=70000) no of cells needed (D=21000) design capacity/ cell 230 units/day 56350 1.2 3.7 actual output 200 units/cell 49000 1.4 4.3 increased output 227 units/cell 55615 1.3 3.8 workdays/year 245 Annual Demand 70000 units Annual Demand after 2 years 210000 units (triple of current annual demand) To satisfy predicted demand under these conditions the company should aquire 4 cells (NOTE: 4 cells because the number of cells required after achieving the increased output is 3.8, rounding of the figure is 4) (we are considering the increased output for determining the numebr of cells to be acquired because aftre the productivity activities, the output is expected to increase, and we are considering demand after 2 years, hence the productivity efforts would have increased the output in that time frame)

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