Question

James is anylyzing the production process of the firm. By Assuming a separate person works at each step in the process, please answer the following questions.

STEP #1 ->	STEP #2-->	Step #3-->	Step #4-->
15 min/unit	40 min/unit	30 min/unit	20 min/unit

=======(A)========

What is the maximum output of the current system in 8 hours?

=========(B)============

How would the maximum output of the system be increased in 8 hours if he hired a new worker for the bottleneck of the production process?  

Answer 1

Answer to question A :

The bottleneck step will be the one which will have maximum processing time per unit and capacity of the bottleneck process will decide capacity of the whole process. In the given case ,.step 2 is the bottleneck step with processing time of 40 minutes per unit. Therefore the process can churn out one unit every 40 minutes.Therefore, maximum output of the current system in 8 hours or 480 minutes = 480/40 = 12 units

MAXIMUM OUTPUT OF THE CURRENT SYSTEM IN 8 HOURS – 12 UNITS

Answer to question B :

When a new worker is hired for the bottleneck step 2, its effective processing capacity becomes = 40/2 = 20 minutes per unit. It no longer remains the bottleneck step. The revised bottleneck step is Step 3 with processing time of 30 minutes per unit. Therefore processing capacity of the whole system also becomes 30 minutes/ unit. Therefore, amount of output the system will produce now in 8 hours or 480 minutes = 480 /30 = 16 units

MAXIMUM OUTPUT OF THE SYSTEM WILL NOW INCRESE FROM 12 PER DAY TO 16 PER DAY.