Question

Kilmer Company has demand for its only product that exceeds its manufacturing capacity. The company provided the following information for the machine whose limited capacity is prohibiting the company from producing and selling additional units points Skipped Actual run time this wook Machine time available per week Actual run note this week Ideal run rate Defect-free output this week Total output this week (including defects) 6,600 minutes 11,000 minutes 5.1 units per minute 6 units per minute 23,562 units 33,660 units Required: 1. & 2. With respect to the company's overall equipment effectiveness, calculate the following: (Do not round intermediate calculations. Round Tinal answers to 2 decimal places and "Units" answers to the nearest whole number.) References 1-a. Utilization rate 1-b. Efficiency rate 1. Quality rate 1-d. Overall equipment effectiveness 2-a. Utilization loss in units 2b. Efficiency loss in units 2-c. Quality loss in units

Answer 1

1-a. Utilization rate = (Actual Run time this week/Machine time available per week) * 100 = (6,600/11,000) * 100 = 60%

1-b. Efficiency rate = (Actual run rate this week/Ideal run rate) * 100 = (5.1/6) * 100 = 85%

1-c. Quality rate = (Defect - free output this week/ Total output this week (including defects) * 100 = (23,562/33,660) * 100 = 70%

1-d. Overall equipment effectiveness = Utilization * Efficiency * Quality = 60% * 85% * 70% = 35.7%

2-a. Utilization loss in units = (Machine time available per week - Actual run time this week) * Actual run rate this week = (11,000 - 6,600) * 5.1 = 22,440 units

2-b. Efficiency loss in units = (Ideal run rate - Actual run rate this week) * Actual run time this week = (6 - 5.1) * 6,600 = 5,940 units

2-c. Quality loss in units = Total output this week (including defects) - Defect - free output this week = 33,660 - 23,562 = 10,098