Exam 6: Capacity Planning

The seven-person maintenance function at a hospital performs both preventive and corrective maintenance on hundreds of items each month.All the workers are scheduled for 40 hours per week and there are four weeks in a month.It is the goal of the maintenance department to achieve 90% utilization with a mix of two-thirds preventive maintenance and one-third corrective maintenance.How many hours each month are spent performing corrective maintenance if they achieve their 90% utilization and correct/preventive mix targets?

Table 6.7 The B.Sharp Company has a rapidly growing product line that requires two work centers,X and Y for manufacture.Work Center X has a current capacity of 50,000 units per year,and Work Center Y is capable of 55,000 units per year.This year (year 0),sales of the product line are expected to reach 50,000 units.Growth is projected at an additional 3,000 units each year through year 3.Pre-tax profits are expected to be $60 per unit throughout the 3-year planning period.Two alternatives are being considered: -Use the information in Table 6.7.What action,if any,should the Sharp Company take?

Table 6.3 The North Bend Manufacturing Company is producing two types of products,A and B.Demand forecasts for next year and other production-related information are provided in the following table: Both products A and B are produced at the same operation called MASAC27A. -Using the information in Table 6.3,what is the total number of hours required for MASAC27A equipment for the next year?

Table 6.8 The Summerville Vitamin Company manufactures bottles of animal-shaped chewable vitamins for children.This product line requires two work centers,tablet manufacturing and packaging.The tablet manufacturing work center has a current capacity of 140,000 bottles per month,and packaging is capable of 100,000 units per month.This year (year 0),monthly sales of the product line are expected to reach 100,000 units.Growth per month is projected at an additional 25,000 units through year 4 (i.e. ,125,000 per month in year #1,150,000 per month in year #2,etc. ).Pre-tax profits are expected to be $5 per unit throughout the 4-year planning period.Two alternatives are being considered: -Expand both tablet manufacturing and packaging at the end of year 0 to a capacity of 200,000 units per month,at a total cost for both work centers of $2,250,000;

If a system is well balanced,which one of the following changes usually calls for a smaller capacity cushion?

What are the four steps involved in making capacity decisions?

A well-educated operations manager used the capacity requirements equation to determine the number of crackerbox welders to purchase for the shop,given the standard time per unit,hours available per machine,among other relevant parameters.He studied the answer,12.6,and concluded that:

Table 6.4 Mr.Lee is considering a capacity expansion for his supermarket.The annual sales projected for the next five years follow.The current capacity is equivalent to $300,000 sales.Assume a 20 percent pretax profit margin. -Using the information in Table 6.4,if Lee expands the capacity to an equivalent of $360,000 sales now (year 0),how much would pretax cash flow in year 5 increase because of this expansion?

Define utilization and give a service process example of it.

A well-educated operations manager used the capacity requirements equation to determine the number of crackerbox welders to purchase for the shop,given the standard time per unit,hours available per machine,among other relevant parameters.He studied the answer,2.2,and concluded that:

Table 6.6 Burdell Labs is a diagnostic laboratory that does various tests (blood tests,urine tests,etc. )for doctors' offices in the Indianapolis area.Test specimens are picked up at the doctors' offices and are transported to the testing facility,with uniform arrivals throughout the day.All tests go through two testing centers in the testing facility,Test Center A and Test Center B.A has a current capacity of 1,000 units per week,and B is capable of 1,500 units per week.The facility operates 50 weeks per year.This year (year 0),test volumes are expected to reach 1,000 units per week.Growth per week is projected at an additional 200 units through year 5 (i.e. ,1,200 per week in year #1,1,400 per week in year #2,etc. ).Pre-tax profits are expected to be $5 per test throughout the 5-year planning period.Two alternatives are being considered: -Use the information in Table 6.6.What is the pre-tax cash flow (net present value)for alternative #2 compared to the base case of doing nothing for the next five years?

The Northern Manufacturing Company is producing products A and B,using the same machine called MASAC27A.Demand forecasts for next year and other production-related information are provided in the following table. The company works 250 days per year and operates 2 shifts each day,each shift covering 8 hours.If 25 percent of capacity cushion is maintained throughout the year,how many machines (MASAC27A)does the company need next year to meet the demand? (Round your answer up to the next whole machine. )

The seven-person maintenance function at a hospital performs both preventive and corrective maintenance on hundreds of items each month.All the workers are scheduled for 40 hours per week and there are four weeks in a month.It is the goal of the maintenance department to achieve 90% utilization with a mix of two-thirds preventive maintenance and one-third corrective maintenance.How many hours each month are spent performing preventive maintenance if they achieve their 90% utilization and correct/preventive mix targets?