Question

Case Scenario: You are a manager the production process within ABC Inc. The facility consists of three different assembly lines (1, 2, 3) making two different products, X and Y. Assembly Line 2 is dedicated to the assembly of product X, and assembly line 3 is dedicated to product Y. Assembly Line 1 can assemble both the products. The production process begins with the procurement of raw materials from suppliers. Next, the raw materials are processed into six independent subassemblies, A–F, in separate work areas within the facility. Each product is then assembled from these subassemblies in one of the assembly lines. Product X involves the assembly of subassemblies A, B, C, and E. Product Y requires that subassemblies B, C, D, E, and F be assembled. Subsequent to assembly, each product is finished, customized (painted and other options added), packaged and shipped. Current trends indicate that 20% of product X and 50% of product Y are customized.

Following are the capacities of the work areas producing the subassemblies:

Subassembly Type	Capacity (Units/Week)
A	2500
B	2400
C	2400
D	2250
E	3500
F	1200

The annual demands for the products are as shown below:

Product	Sub-assemblies required for one unit of product	Annual Unit Sales
X	(2 of A); (1 of B, C, E)	52,000
Y	(1 of B, C, F); (2 of D, E)	52,000

The capacities of the assembly lines and the finishing, packaging and customizing areas are as given below:

Assembly line 1        1200 units/week        Finishing             2500 units/week

Assembly line 2        500 units/week          Customizing       820 units/week

Assembly line 3        600 units/week           Packaging          3000 units/week

Assumptions:    (1) Assume 52 operating weeks/year.

     (2) Plan production to just meet the demand (do not overproduce).

Answer the following questions. Show your calculations.

1. The key business problem in such situation is identification of the bottleneck resource. With the weekly demands of 1000 for each product X and Y, what is the current bottleneck resource?

2. Management must deal with changing demand and resource constraint, by analyzing alternative business scenarios. If the weekly demand for X and Y increased proportionately, identify the top three resources that are bottleneck candidates.

3. What does the above analysis tell you about the effect of demand changes in the product mix of a multiple product plant, on bottleneck shift? Justify your answer.

Answer 1

(1)

	Demand
X	1000
Y	1000
Resources	Load	Capacity	Bottleneck?	Capacity - Load
Assy 1	1100	1200	No	100
Assy 2	400	500	No	100
Assy 3	500	600	No	100
A	2000	2500	No	500
B	2000	2400	No	400
C	2000	2400	No	400
D	2000	2250	No	250
E	3000	3500	No	500
F	1000	1200	No	200
Finishing	2000	2500	No	500
Customizing	700	820	No	120
Packaging	2000	3000	No	1000

Since there were no specific mix requirements of X and Y in the three assembly units, we have taken the loads strategically to avoid forming any bottleneck. So, under this condition, there is no real bottleneck up to an increase of 100 units per week.

But from the point of view of the minimum capacity, Assembly 2 is the next candidate for bottleneck because it has the least capacity.

2.

Since the (Capacity - Load) gap is least for the three assemblies, when we increase the demand of X and Y, the three assemblies will become bottlenecks step-by-step. After that 'Customization' will become bottlenecks. Following are such configurations.

3.

This tells us that by appropriately choosing the product mix, bottlenecks can be created/ eliminated/ shifted. The management can decide the process station bottlenecks if it has flexibility in production. The emergence of bottlenecks can be delayed if there is flexibility in the system (in this case, the Assembly 1). More the flexibility later is the appearance of the bottleneck in the system.