Question

The Goodparts Company produces a component that is subsequently used in the aerospace industry. The component consists of three parts (A, B, and C) that are purchased from outside and cost 40, 35, and 15 cents per piece, respectively. Parts A and B are assembled first on assembly line 1, which produces 170 components per hour. Part C undergoes a drilling operation before being finally assembled with the output from assembly line 1. There are, in total, six drilling machines, but at present only three of them are operational. Each drilling machine drills part C at a rate of 55 parts per hour. In the final assembly, the output from assembly line 1 is assembled with the drilled part C. The final assembly line produces at a rate of 160 components per hour. At present, components are produced eight hours a day and five days a week. Management believes that if the need arises, it can add a second shift of eight hours for the assembly lines.

The cost of assembly labor is 30 cents per part for each assembly line; the cost of drilling labor is 15 cents per part. For drilling, the cost of electricity is one cent per part. The total overhead cost has been calculated as $1,200 per week. The depreciation cost for equipment has been calculated as $30 per week.

a) Suppose the second shift of eight hours is run for assembly line 1 and the same is done for the final assembly line. In addition, four of the six drilling machines are made operational. The drilling machines, however, operate for just eight hours a day. What is the new process capacity (number of components produced per week)? Which of the three operations limits the capacity?

Answer 1

Answer a) We will find the new process capacities at each of the workstations as mentioned below:

1. New Process Capacity at Assembly Line 1=

= Components Processed Per Hour X Operating Hours Per Day X Shifts Per Day X No. of Days Per Week

Where Components processed per hour = 170 Components / Hour (As given in the question)

Operating Hours per day = 8 Hours / Day (As given in the question),

Shifts per day = 2 Shifts / Day (As given in the question), and

No, of Days per Week = 5 Days / Week (As given in the question)

Hence, we get New Process Capacity at Assembly Line 1 = 170 X 8 X 2 X 5 = 13600 Components Per Week

2. New Process Capacity at Drilling Operation =

= No. of Part C Drilled Per Hour X No. of Operational Machines X Operating Hours Per Day X No. of Days Per Week

Where No. of Part C Drilled Per Hour = 55 (As given in the question)

No. of Operational Machines = 4 (As given in the question)

Operating Hours Per Day = 8 (As given in the question)

No. of Days Per Week = 5

Hence, we get New Process Capacity at Drilling Operation = 55 X 4 X 8 X 5 = 8800 Components Per Week

3. New Process Capacity at Final Assembly =

= Components Processed Per Hour X Operating Hours Per Day X Shifts Per Day X No. of Days Per Week

Where Components processed per hour = 160 Components / Hour (As given in the question)

Operating Hours per day = 8 Hours / Day (As given in the question),

Shifts per day = 2 Shifts / Day (As given in the question), and

No, of Days per Week = 5 Days / Week (As given in the question)

Hence, we get New Process Capacity at Assembly Line 1 = 160 X 8 X 2 X 5 = 12800 Components Per Week

Conclusion:

Hence, we note that the Drilling Operation is a bottleneck (Producing the least no. of components per week), which limits the overall new process capacity to 8800 Components Per Week.