Problem 1. Development of a new deluxe version of a particular software product is being considered. The activities necessary for the completion of this project are listed in the table below along with their costs and completion times in weeks.
Activity | Normal Time | Crash Time | Normal Cost | Crash Cost | Immediate Predecessor |
A | 4 | 3 | 2,000 | 2,600 | - |
B | 2 | 1 | 2,200 | 2,800 | A |
C | 3 | 3 | 500 | 500 | A |
D | 8 | 4 | 2,300 | 2,600 | A |
E | 6 | 3 | 900 | 1,200 | B, D |
F | 3 | 2 | 3,000 | 4,200 | C, E |
G | 4 | 2 | 1,400 | 2,000 | F |
(a) What is the project expected completion date?
(b) What is the total cost required for completing this project on normal ...view middle of the document...
Design capacity = 8 hrs. x 400 tumblers = 3,200 tumblers per 8-hour shift.
b. Effective capacity = Design capacity - Nonproductive activities.
Design capacity 8.0 hrs.
Less: Breaks .5 hrs.
Heat-up .5 hrs.
Net productive time 7.0 hrs.
Effective capacity = 7 hrs. x 400 tumblers = 2,800 tumblers.
Effective capacity percent = (100)(2800)/3200 = 87.5%.
c. Actual output = 10,000/5 = 2,000 tumblers per 8-hour shift. (This is a mean output. In reality there will be variation; some shifts will exceed 2,000 tumblers and some will fall short.)
d. Efficiency = Actual output/Effective capacity = (100)(2000)/2800 = 71.43%.
e. Utilization = Actual output/Design capacity = (100)(2000)/3200 = 62.50%.
Problem 1. Emarpy Appliance is a company that produces all kinds of major appliances. Bud Banis, the president of Emarpy, is concerned about the production policy for the company's
best- selling refrigerator. The annual demand for this has been about 8,000 units each year, and this demand has been constant through out the year. The production capacity is 200 units per day. Each time production starts, it costs the company $120 to move materials into place, reset the assembly line, and clean the equipment. The holding cost of a refrigerator is $50 per year. The current production plan calls for 400 refrigerators to be produced in each production run. Assume there are 250 working days per year.
a) What is the daily demand of this product?
b) If the company were to continue to produce 400 units each time production starts, how many days would production continue?
c) Under the current policy, how many production runs per year would be required? What would the annual setup cost be?
d) If the current policy continues, how many refrigerators would be in inventory when production stops? What would the average inventory level be?
e) If the company produces 400 refrigerators at a time, what would the total annual setup cost and holding cost be?
f) If Bud Banis wants to minimize the total annual inventory cost, how many refrigerators should be produced in each production run? How much would this save the company in inventory costs compared to the current policy of producing 400 in each production run?
Annual demand, D = 8,000, Daily production rate, p = 200, Setup cost, S = 120, Holding cost, H = 50, Production quantity, Q = 400
(a) Daily demand, d = D/250 = 8,000/250 = 32
(b) Number of days in production run = Q/p = 400/200 = 2
(c) Number of production runs per year = D/Q = 8,000/400 = 20
Annual setup cost = 20($120) = $2,400
(d) Maximum inventory level = Q(1 – d/p) = 400(1 – 32/200) 336
Average inventory = Maximum/2 = 336/2 = 168
(e) Total holding cost + Total setup cost = (168)50 + 20(120) = $8,400 + $2,400 = $10,800
(f) Q = √(2DS)/H * (1 – d/p) = √(2*8,000*120)/50(1 – 32/200) = 213.8
Total holding cost + Total setup cost = 4,490 + 4,490 = $8,980
Savings = $10,800 – $8,980 = $1,820
The following are monthly actual and forecast...