OPERATIONS MANAGEMENT (LL) W/CONNECT
14th Edition
ISBN: 9781265502942
Author: Stevenson
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 5, Problem 10P
A company must decide which type of machine to buy, and how many units of that type, given the following information:
Product demand and processing times for the equipment are:
a. How many machines of each type would be required to handle demand if the machines will operate 8 hours a day, 250 days a year, and what annual capacity cushion in processing time would result for each?
b. With high certainty of annual demand, which type of machine would be chosen if that was an important consideration?
c. If purchasing and operating costs are taken into account, which type of machine would minimize total costs, given your answer for part a? Operating costs are $6/hr for type 1 and $5/hr for type 2.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
a. what is the relationship between design capacity, system capacity, and actual output.
b. how is a projected output within the boundaries of the design capacity and system capacity?
How does capacity analysis behave when a large number of processes are operating concurrently?
A manager must decide which type of machine to buy, A, B, or C. Machines costs are as follows:
Machine
Cost
A
$40,000
B
$30,000
C
$80,000
Product forecast, processing times on the machines, and setup times are as follows:
Processing Time Per Unit (minutes)
Product
Annual Demand
A
B
C
Setup Times (minutes)
Production Lots (units)
1
16,000
3
4
2
20
200
2
12,000
4
5
3
35
100
3
6,000
5
6
3
60
50
4
30,000
2
4
1
15
500
Machines operate 10 hours a day, 250 days a year. The manager wants to have a capacity cushion of 10%.
a. Assume that only purchasing costs are being considered. Which machines would have the lowest total cost, and how many of that machines would be needed?
b. Consider this additional information: The machines differ in terms of hourly operating costs: The A machines have an hourly operating cost of $11 each, B machines have an hourly operating cost of $10 each, and C machines have an hourly operating cost of $12 each. Which alternative would…
Chapter 5 Solutions
OPERATIONS MANAGEMENT (LL) W/CONNECT
Ch. 5.8 - Explain the meaning of the phrase Hours versus...Ch. 5.8 - Prob. 1.2RQCh. 5.8 - Prob. 1.3RQCh. 5.8 - Prob. 1.4RQCh. 5.8 - Prob. 1.5RQCh. 5.S - Prob. 1DRQCh. 5.S - Prob. 2DRQCh. 5.S - Explain the term bounded rationality.Ch. 5.S - Prob. 4DRQCh. 5.S - Prob. 5DRQ
Ch. 5.S - What information is contained in a payoff table?Ch. 5.S - Prob. 7DRQCh. 5.S - Prob. 8DRQCh. 5.S - Under what circumstances is expected monetary...Ch. 5.S - Explain or define each of these terms: a. Laplace...Ch. 5.S - Prob. 11DRQCh. 5.S - Prob. 12DRQCh. 5.S - Prob. 13DRQCh. 5.S - Prob. 1PCh. 5.S - Refer to problem1. Suppose after a certain amount...Ch. 5.S - Refer to Problems 1 and 2 Construct a graph that...Ch. 5.S - Prob. 4PCh. 5.S - Prob. 5PCh. 5.S - The lease of Theme Park, Inc., is about to expire....Ch. 5.S - Prob. 7PCh. 5.S - Prob. 8PCh. 5.S - Prob. 9PCh. 5.S - A manager must decide how many machines of a...Ch. 5.S - Prob. 11PCh. 5.S - Prob. 12PCh. 5.S - Prob. 13PCh. 5.S - Prob. 14PCh. 5.S - Give this payoff table: a. Determine the range of...Ch. 5.S - Prob. 16PCh. 5.S - Repeat all parts of problem 16, assuming the value...Ch. 5 - Prob. 1DRQCh. 5 - Prob. 2DRQCh. 5 - How do long-term and short-term capacity...Ch. 5 - Give an example of a good and a service that...Ch. 5 - Give some example of building flexibility into...Ch. 5 - Why is it important to adopt a big-picture...Ch. 5 - What is meant by capacity in chunks, and why is...Ch. 5 - Prob. 8DRQCh. 5 - How can a systems approach to capacity planning be...Ch. 5 - Prob. 10DRQCh. 5 - Why is it important to match process capabilities...Ch. 5 - Briefly discuss how uncertainty affects capacity...Ch. 5 - Prob. 13DRQCh. 5 - Prob. 14DRQCh. 5 - Prob. 15DRQCh. 5 - Prob. 16DRQCh. 5 - What is the benefit to a business organization of...Ch. 5 - Prob. 1TSCh. 5 - Prob. 2TSCh. 5 - Prob. 3TSCh. 5 - Prob. 1CTECh. 5 - Prob. 2CTECh. 5 - Identify four potential unethical actions or...Ch. 5 - Any increase in efficiency also increases...Ch. 5 - Prob. 1PCh. 5 - In a job shop, effective capacity is only 50...Ch. 5 - A producer of pottery is considering the addition...Ch. 5 - A small firm intends to increase the capacity of a...Ch. 5 - A producer of felt-tip pens has received a...Ch. 5 - A real estate agent is considering changing her...Ch. 5 - A firm plans to begin production of a new small...Ch. 5 - A manager is trying to decide whether to purchase...Ch. 5 - A company manufactures a product using two machine...Ch. 5 - A company must decide which type of machine to...Ch. 5 - Prob. 11PCh. 5 - A manager must decide how many machines of a...Ch. 5 - Prob. 13PCh. 5 - The following diagram shows a four-step process...Ch. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - A new machine will cost 18,000, butt result it...Ch. 5 - Remodelling an office will cost 25,000 and will...Ch. 5 - Prob. 1CQCh. 5 - Prob. 2CQCh. 5 - Prob. 3CQ
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- 1.if manufacturing capacity can only be utlized in manufacturing the keyboards what should company do, make/buy? if the company could utlize the spare capacity in producing 30,000 modems,with vaiable cost $12 per unit.what should the company do, knowing that it can sell the modems at $22 per unit?arrow_forwardManufacturing Company uses FIFO method of accumulating costs in a two-department process. Materials are introduced at the inception of the process except for a special material which is added in department 2 at 60% completion as to overhead. Inspection is done at the end of the process in both departments. Production data for Department 2 are given below: In process, beginning, (80% labor, 70% overhead)2,000 Transferred in 14,900 In process, ending (40% labor, 20% overhead) 3,000 Normal spoilage 200 Abnormal spoilage (found at 30% completion as to laborand 15% as to overhead due to internal failure) 400 Cost data for the month:In process beginning:Transferred in 15,020 Special materials 1,900 Direct labor 4,388 Overhead 11,044 Current costs:Transferred in 137,080 Special materials 14,030 Direct labor 46,000 Overhead 113,564 The cost of units transferred to finished goods is?The cost of spoilage charged to revenue is?arrow_forwardThe owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. If, for this machine, design capacity is 50 cords per day, effective capacity is 40 cords per day, and actual output is anticipated to be 35 cords per day, what would be its utilization? 100 percent 80 percent 75 percent 70 percent 0 percent The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. If, for this machine, design capacity is 50 cords per day, effective capacity is 40 cords per day, and actual output is expected to be 32 cords per day, what would be its efficiency? 100 percent 80 percent 75 percent 70 percent 0 percentarrow_forward
- Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 5555% in the last year. On far too many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only production change that will be made in order to meet the increased demand. The bakery currently makes 1,800 loaves per month. Employees are paid $8 per hour. In addition to the labor cost, Charles also has a constant utility cost per month of $800 and a per loaf ingredient cost of $0.35 Current multifactor productivity for 640 work hours per month =0.27loaves/dollar (round your response to three decimal places).arrow_forwardThe owner of Old-Fashioned Berry Pies, S. Simon, is contemplating adding a new line ofpies, which will require leasing new equipment for a monthly payment of $6,000. Variablecosts would be $2 per pie, and pies would retail for $7 each.a. How many pies must be sold in order to break even?b. What would the profit (loss) be if 1,000 pies are made and sold in a month?c. How many pies must be sold to realize a profit of $4,000?d. If 2,000 can be sold, and a profit target is $5,000, what price should be charged per pie?arrow_forwardA company has a factory that is designed so that it is most efi cient (average unit cost is minimized) when producing 15,000 units of output each month. However, it has an absolute maximum output capability of 17,250 units per month, and can produce as little as 7,000 units per month without corporate headquarters shifting production to another plant. If the factory produces 10,925 units in October, what is the capacity utilization rate in October for this factory?arrow_forward
- A business company has the following capacity per month based on the following: 30 working days per month; 1 shift operation at 8 hours per shift; 30 minutes break per shift per employee ABC company produces bicycles and has the following Capacities per process. Frame Welding: 60 bikes per hour per machine Painting: 20 bikes per hour per worker Assembly: 50 bikes per hour per worker Inspection: 100 bikes per hour per worker What can be observed from the system if the demand for the month is 5,000 bikes?arrow_forwardHow does the capacity analysis react when many processes are running concurrently?arrow_forwardThe owner of Old-Fashioned Berry Pies, S. Simon, is contemplating adding a new line of pies, which will require leasing new equipment for a monthly payment of $6,000. Variable costs would be $2 per pie, and pies would retail for $7 each. a. How many pies must be sold in order to break even? b. What would the profit (loss) be if 1,000 pies are made and sold in a month? How many pies must be sold to realize a profit of $4,000? С. d. If 2,000 can be sold, and a profit target is $5,000, what price should be charged per pie? 5-30arrow_forward
- State the advantage and disadvantage of varying the workforce in accordance to the predicted changes in demand requirements.arrow_forwardIf a plant has an effective capacity of 6,400 and an efficiency of 88%, then its actual (planned) output =_______units (enter your response as a whole number).arrow_forwardValerie is in the business of selling toys. She has noticed that the sale of toys increases on long holiday weekends. She has instructed her staff to work for extra hours on these days to manage the demand. What strategy is Valerie using to adjust her capacity to the demand?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
Process selection and facility layout; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=wjxS79880MM;License: Standard YouTube License, CC-BY