Question

Below is the XYZ operation. Molded Parts Mold Parts Finished Componen Final Assembly Purchased Pary Vnventory Purchase Parts from Vendors Assumptions 1) One worker is needed to operate each machine in the molding dept. 2) The molding dept. has 10 machines. 3) Currently 6 workers in the molding dept., earning $15 per hour. 4) Each molding machine produces 25 parts per hour. 5) Molding workers will work overtime at a 50% wage premium. 6) The purchased parts operation has virtually unlimited capacity. 7) 15 workers in final assembly working an 8-hour shift and earning $10 per hour 8) 5-day work week 9) Assembly line moves at 150 parts per hour. 1) What is the weekly capacity of the molding operation? 2) What is the weekly capacity of the assembly operation? 3) What is the weekly capacity of the entire operation? 4) What is the labor cost per part in the molding department? 5) What is the labor cost per part in the assembly department? 6) Suppose that 4 workers are added to the molding department so that all 10 machines are utilized. What is the new capacity of the molding depart?

suppose that a second shift is added to the assembly department. what is the new capacity of the assembly department

Answer 1

Answer 1)

Weekly capacity of the molding operation

Number of employees = 6

Each machine requires 1 employee to operate

Therefore a total of 6 machines would be working.

Total number of hours of operation in the molding operation = Number of employees X Number of hours per day X Number of days per week = 6 X 8 X 5 = 240 hours

Number of parts per hour = 25

Therefore total capacity of the molding department = 25 X 240 = 6000 parts  

Answer 2)

Weekly capacity of the assembly operation

Number of employees = 15

Total number of hours of operation in the assembly operation = Number of employees X Number of hours per day X Number of days per week = 15 X 8 X 5 = 600 hrs

Number of parts per hour = 150

Therefore total capacity of the molding department = 150 X 600 = 90000 parts  

Answer 3)

Weekly capacity of the entire operation

Weekly capacity of the molding operation = 6000 parts

Weekly capacity of the purchase parts operation = Virtually infinite

Weekly capacity of the molding operation = 90000 parts

Therefore capacity of the entire operation = least of the three = 6000 parts

Answer 4)

If all the 10 machines are worked and the labors are paid overtime premium

Total number of hours worked = 10 machines X 8 hours per day X 5 days a week = 400 hours

Out of these 400 hours, 240 hours are worked under normal time and 160 hours are worked overtime.

Labor cost per hour for normal time = $15

Labor cost per hour for over time = $15 + 50% of 15 = $22.5

Total labor cost = 240 X 15 + 160 X 22.5 = $7200

Total number parts if worked overtime = 400 hours X 25 parts per hour = 10000 parts

Labor cost per part = 7200/ 10000 = 0.72 per part

Answer 5)

Cost per labor hour in the assembly department = 10

total number of products that are assembled in 1 hour = 150

Therefore cost per hour = 10/ 150 = $0.067 per part

Answer 6)

If 4 more workers are added to the molding department and all 10 machines are working, then capacity = 400 hours X 25 parts per hour = 10000 parts

Answer 7)

If second shift is added to the assembly department, the capacity would be doubled = 90000 X 2 = 180000 parts.

This can also be calculated as = 15 workers X 8 hours per shift X 2 Shifts X 5 days a week X 150 parts per hour = 180000 parts