The “Monique Food Processing Company” in Chapter 8 of your text. Monique Food Pr
ID: 465518 • Letter: T
Question
The “Monique Food Processing Company” in Chapter 8 of your text. Monique Food Processing Company produces light snacks that can be heated in a microwave. The following steps are included in the process: Steps Description Capacity (Units/Hour) 1 Prepare food 200 2 Measure and place in plastic pouch 175 3 Prepare cardboard box 200 4 Insert pouch into box 300 5 Shrink-wrap box 200 a.What is the system capacity, and which is the bottleneck department? b.How much slack (unused capacity) is available in other departments? c.How much system capacity can be gained by adding capacity to the bottleneck? d.What are the key factors that determine when to add capacity? e.Why would an organization want to reduce its capacity? Make and include calculations. Answer questions “a” through “e.” Your response should be 200-250 words.
Explanation / Answer
a). System Capacity = 175 units per hour. This is the capacity of bottleneck department (measure and place in plastic pouch), it has maximum utilization.
b). The slack available in other departments is capacity in excess of 175, Thus slack available is given below
1, Prepared Food = 200 - 175 = 25
2. Measure and place in plastic pouch = 175-175 = 0
3. Prepare Cardboard box = 200 - 175 = 25
4. Insert pouch into box = 300 - 175 = 125
5. Shrink-wrap box = 200 - 175 = 25
c). The minimum slack in all of the departments, other thank bottleneck department is 25. Therefore 25 units/hour capacity can be gained by adding this much capacity (25 units/hour) to the bottleneck.
d). The key factors that determine the capacity expansion decision are demand forecast, availability of resources, cost of available resources, cost of unutilized resources in departments other than bottleneck.
e) An organization may want to reduce it capacity in situations, when the demand is low and the cost of keeping unutilized resources is high. Also when the opportunity cost of using the available resources to other business is comparatively high, then it makes sense to reduce the capacity for particular business.
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