Question

Suppose that the annual demand will be 10000 units. The company operates 250 days/year, with two 8-hour shifts a day. Management believes that a capacity cushion of 15% is the best. Average lot site is 50 units and the standard processing time is 0.5 hours. Each lot requires 0.2 hours standard set up time. How many production line would be needed to compensate the demand?(15pts)

Answer 1

Total Demand = 10000 units

Batch Size = 50 units

No. of Batches = Total Demand / Batch size = 10000 / 50 = 200 batches

Set-up time per lot = 0.2 hours

Total Set-up time = No. of Batches * Set-up time per lot = 200 * 0.2 = 40 hours

Standard processing time per unit = 0.5 hours

Total processing time = Total Demand * Standard processing time per unit = 10000 * 0.5 = 5000

Total Time = 5000 + 40 = 5040 hours

Capacity cushion = 15%

Total time including capacity cushion = 5040 * 1.15 = 5,796‬ hours

Total Time available = Days per year * No. of shifts * Hours per shift = 250 * 2 * 8 = 4000

No. of processing lines = Total time including capacity cushion / Total Time available = 5796 / 4000 = 1.45 = 2 lines

Answer: 2 nos. production lines would be needed to compensate the demand.

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