In this case, the utilization of effective capacity for each operation represent

Question

In this case, the utilization of effective capacity for each operation represents the percent of maximum capacity each operation is actually expected to maintain for next month. For example, for next month, Operation B's effective capacity is expected to be 77 percent of its maximum capacity, 455 units (= 100 + 80 + 150 + 125). Thus, Operation B is expected to product 350.35 units per hour (= 455 units * 77 percent) next month. Operation's D effective capacity can be calculated in the same way: 308.125 units per hour (= 425 units * 72.5 percent). For the company's overall production process next month: Calculate maximum capacity. For this question, you need to take a look at the maximum capacity of each operation so that you can find the bottleneck in this process. Calculate effective capacity. For this question, you need to take a look at the effective capacity of each operation so that you can find the bottleneck in this process.

Explanation / Answer

Maximum Capacity and Effective Capacity for each operation is calculated as given below :

Operation C has the lowest Maximum Capacity, therefore it is the bottleneck process

Operation D has the lowest Effective Capacity, therefore it is the bottleneck process

Operation A Machine Maximum Capacity (Units/hour) Utilization of effective capacity for each operation Maximum capacity Effective Capacity A A1 400 80% 400 320 B B1 100 77% 455 350.35 B2 80 B3 150 B4 125 C C1 350 95% 350 332.5 D D1 190 72.50% 425 308.125 D2 235

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