Beck Manufacturing and Plant Capacity
Annette Davita-Pratt
Ashford University: BUS 644
Operations Management
Dr. Andrew E. Jackson
May 14th, 2017 Determining capacity is a very important of company day to day operations as it considers whether the amount of work that a company is putting out is capable of meeting supply and demand. Management must make correct decisions that consider product mix issues, whether or not processes and capacity can be improved without adding risky staffing or machinery investments, how to avoid bottleneck areas and whether quality is at expected consumer standards (Vonderembse & White, 2013).
Calculations of the Machine Center Capacity and the Capacity of the System
Beck Manufacturing is a
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This measures effectiveness at the unit level of operation. The total effective equipment productivity (TEEP) adds a time component to the calculations. It measures the effectiveness of manufacturing against hours worked (Grabill, 2012).
Where Should the Beck Company Focus Efforts in order to Expand Capacity If management is looking to improve production at the machines before product assembly, they should concentrate on reducing wasted employee time. There is a lot of wasted time at the drilling and grinding machines, even though there are a lot of these machines. Either there are not enough employees, the employees are not utilizing the machinery efficiently or the machinery should be updated. Management is not averse to hiring more employees or restructuring the way the assembly operations are done. Before expanding on new employees and subsequently a larger payroll, there should be an examination of whether the current employees should have their job duties audited and restructured. When auditing employee job performances, it should be done through legal counsel or an independent agency. This ensures the audits are compliant within legal and government parameters (Silverman & Sandhu, 2013).
How Much Extra Capacity Can Beck Get Without Causing Another Operation to Become the Bottleneck There are three (3) bottlenecks occurring at Beck Manufacturing and Plant. The worst bottleneck is at
• A situation where a reduction in production will result in less overhead allocated to the respective product
Forecasting activity being carried on by the principals of Fantastic for their business of ceiling fans marketing and assembling that was rapidly growing. Basic purpose behind making the forecasts was the decision on assembling and importing ceiling fans. The idea was to find a low priced, “assemble it yourself fan” from Taiwan and Hong Kong. These ceiling fans were cost effective as they reduced cooling cost during summer and heating cost during winter.
One of the biggest needs for improvement was the assembly process. Although several changes were made throughout the years, quality and efficiency still fell below expectations. Hinrichs implemented the newly developed assembly which consists of two separate work stations that allowed operators in the adjacent stations to share the expensive balancer machine. These assembly cells were much more efficient as workers were no longer forced to wait for another person or machine in the process. Each cell was built like the other with quick turn set-up which created flexibility in the process while also reducing tooling inventory by almost a half. Now cells
with no work stoppage · · Increase capacity by 44,800 wafers Have control of wafer manufactured
Alex comes up with the consensus that the “Goal” of his business and many others is to increase net profit while simultaneously increasing return on investment and their cash flow at the plant. This basically means to make money. These three measurements can be achieved by looking closer into his second set of measurements. Alex specifically must find a way to increase throughput while at the same time decreasing it inventory and operational expenses. All three of these measurements must be cautiously monitored since they all rely on each other to be obtained in balance. Factors that cause throughput, inventory, and operational expenses to become unbalanced are excess manpower and balance capacity of the demand of resources in the market.
The pieces to work stations or to operator in the production line or line segment is 2000 to 15 or 400 to 3 based on 15 direct labor employees. (See question 2)
In order to meet customer demands for higher product quality, to comply with federally-mandated environmental regulations, and to reduce production costs, HCC must spend $2,000,000 within the next three years to upgrade equipment. The upgrade is expected to result in production efficiencies that will lower material and labor costs by reducing defective products, process waste, in-process inventory, and production man-hours through simplified work processes. It has been over a decade since significant modifications were made to the production facilities. Those changes were mostly technical in nature and did not substantially alter work processes or reduce overall employment. The average productivity gain in the industry for the past five years has been 3% per year. Financing for the loan to purchase the equipment
The Ilarion Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on the basis of direct labor cost. Its predetermined overhead rate was based on a cost formula that estimated $117,000 of manufacturing overhead for an estimated allocation base of $90,000 direct labor dollars. The company has provided the following data in the form of an Excel worksheet:
With the problems piling up at the Engstrom plant causing it to go downhill, there are solutions to the problems. As work
currently was operating its plant at about 75% of a one-shift capacity. Thus, the added volume from
Inventory, 1/1/X6 |24,000 units | |Units manufactured |80,000 | |Units sold |82,000 | |Inventory, 12/31/X6 |22,000 units | |Manufacturing costs: | |Direct materials |$3 per unit | |Direct labor |$5 per unit | |Variable factory overhead |$9 per unit | |Fixed factory overhead |$280,000 | |Selling & administrative expenses: | |Variable |$2 per unit | |Fixed |$136,000 | |
2. There are two limitations on throughput for Receiving Plant 1. For wet cranberries, throughput is limited by the Dryer capacity to 600 bbl/hr. In terms of total throughput of RP1, the limitation is on separating capacity at 1200 bbl/hr. At the drying unit, the total processing rate of wet berries falls short of the arrival rate (1050 bbl/hr) by 450 bbl/hr. The solution is to either increase the overtime hours, purchase additional dryers or a combination of both.
List the four factors auditors should consider when evaluating the results of confirmation procedures. Also, what are three of the characteristics of a reliable confirmation? (For this and other questions, you may which to refer relevant auditing standards).
It is a common desire to have a balanced plant, but this cannot be reached if there are problems with the levels of capacity in the plant. If there is not enough capacity in the plant, it almost seems as if the possibility of having throughput is being lost and if there is an excessive amount of capacity there is money that is being wasted, which would be a problem when trying to reduce the operating expenses. However, in reality the closer that a plant comes to being balanced, the closer they get to losing money. “ Look at this obsession with trimming capacity in terms of the goal,
Large quantities of work in process are often characteristic of this type of production system. This may lead to longer throughput time, poor quality concealed by bundles, large inventory, extra handling, and difficulty in controlling inventory