Mfg Metrics-3e-S 11-24, 24/06, 06/04/07

Chapter 3 MANUFACTURING METRICS

REVIEW QUESTIONS
3.1 What is the cycle time in a manufacturing o eration! Answer" #s $efine$ in the te%t, the cycle time Tc is the time that one &or' unit s en$s (eing rocesse$ or assem(le$. )t is the time (et&een &hen one &or' unit (egins rocessing *or assem(ly+ an$ &hen the ne%t unit (egins. 3.2 What is a (ottlenec' station! Answer" ,he (ottlenec' station is the slo&est &or'station in a ro$uction line, an$ therefore it limits the ace of the entire line. 3.3 What is ro$uction ca acity! Answer" #s $efine$ in the te%t, ro$uction ca acity is the ma%imum rate of out ut that a ro$uction facility *or ro$uction line, &or' center, or grou of &or' centers+ is a(le to ro$uce un$er a gi-en set of assume$ o erating con$itions. 3.4 .o& can lant ca acity (e increase$ or $ecrease$ in the short term! Answer" #s liste$ in the te%t, the t&o &ays that lant ca acity can (e increase$ or $ecrease$ in the short term are *1+ change the num(er of &or' shifts er &ee' Sw or *2+ change the num(er of hours &or'e$ er shift Hsh. 3./ What is utili0ation in a manufacturing lant! 1ro-i$e a $efinition. Answer" 2tili0ation is the amount of out ut of a ro$uction facility relati-e to its ca acity. 3% ressing this as an e4uation, U 5 Q/PC, &here U 5 utili0ation, Q 5 actual out ut 4uantity ro$uce$ $uring the erio$ of interest, an$ PC is the ro$uction ca acity $uring the same erio$. 3.6 What is a-aila(ility an$ ho& is it $efine$! Answer" #-aila(ility is a relia(ility metric that in$icates the ro ortion of time that a iece of e4ui ment is u an$ &or'ing ro erly. )t is $efine$ as follo&s" A 5 *MTBF 6 MTTR+/MTBF, &here A 5 a-aila(ility, MTBF 5 mean time (et&een failures, an$ MTTR 5 mean time to re air. 3.7 What is manufacturing lea$ time! Answer" #s $efine$ in the te%t, manufacturing lea$ time is the total time re4uire$ to rocess a gi-en art or ro$uct through the lant, inclu$ing any lost time $ue to $elays, time s ent in storage, relia(ility ro(lems, an$ so on. 3.7 What is &or'-in- rocess! Answer" #s $efine$ in the te%t, &or'-in- rocess *W)1+ is the 4uantity of arts or ro$ucts currently locate$ in the factory that are either (eing rocesse$ or are (et&een rocessing o erations. W)1 is in-entory that is in the state of (eing transforme$ from ra& material to finishe$ ro$uct. 3.8 .o& are fi%e$ costs $istinguishe$ from -aria(le costs in manufacturing! Answer" 9i%e$ costs remain constant for any le-el of ro$uction out ut. 3%am les inclu$e the cost of the factory (uil$ing an$ ro$uction e4ui ment, insurance, an$ ro erty ta%es. :aria(le costs -ary in ro ortion to the le-el of ro$uction out ut. #s out ut increases, -aria(le costs increase. 3%am les inclu$e $irect la(or, ra& materials, an$ electric o&er to o erate the ro$uction e4ui ment. 3.10 ;ame fi-e ty ical factory o-erhea$ e% enses! Answer" ,a(le 3.1 in the te%t lists the follo&ing e%am les of factory o-erhea$ e% enses" lant su er-ision, a lica(le ta%es, factory $e reciation, line foremen, insurance, e4ui ment $e reciation, maintenance, heat an$ air con$itioning, fringe (enefits, custo$ial ser-ices, light, material han$ling, security ersonnel, o&er for machinery, shi ing an$ recei-ing, tool cri( atten$ant, ayroll ser-ices, an$ clerical su ort. 3.11 ;ame fi-e ty ical cor orate o-erhea$ e% enses! 6

Mfg Metrics-3e-S 11-24, 24/06, 06/04/07 Answer" ,a(le 3.2 in the te%t lists the follo&ing e%am les of cor orate o-erhea$ e% enses" cor orate e%ecuti-es, engineering, a lica(le ta%es, sales an$ mar'eting, research an$ $e-elo ment, cost of office s ace, accounting $e artment, su ort ersonnel, security ersonnel, finance $e artment, insurance, heat an$ air con$itioning, legal counsel, fringe (enefits, an$ lighting.

PROBLEMS Production Concepts and Mathematical Models

3.1 # certain art is route$ through si% machines in a (atch ro$uction lant. ,he setu an$ o eration times for each machine are gi-en in the ta(le (elo&. ,he (atch si0e is 100 an$ the a-erage nono eration time er machine is 12 hours. <etermine *a+ manufacturing lea$ time an$ *(+ ro$uction rate for o eration 3. Machine 1 2 3 4 / 6 Setu time *hr.+ 4 2 7 3 3 4 = eration time *min.+ /.0 3./ 10.0 1.8 4.1 2./

Solution" #-erage Tsu 5 *4 > 2 > 7 > 3 > 3 > 4+/6 5 24/6 5 4.0 hr #-erage Tc 5 */ > 3./ > 10 > 1.8 > 4.1 > 2./+/6 5 27/6 5 4./ min *a+ MLT 5 6*4.0 > 100*4.//60+ > 12+ 5 6*23./+ 5 ! hr *(+ Rp for o eration 3" Tp 5 ?7.0 > 100*10/60+@/100 5 24.67/100 5 0.2467 hr/ c 3.1 Rp 5 !"#$ pc%hr Su ose the art in the re-ious ro(lem is ma$e in -ery large 4uantities on a ro$uction line in &hich an automate$ &or' han$ling system is use$ to transfer arts (et&een machines. ,ransfer time (et&een stations 5 1/ s. ,he total time re4uire$ to set u the entire line is 1/0 hours. #ssume that the o eration times at the in$i-i$ual machines remain the same. <etermine *a+ manufacturing lea$ time for a art coming off the line, *(+ ro$uction rate for o eration 3, *c+ theoretical ro$uction rate for the entire ro$uction line! Solution" *a+ MLT 5 6*10.2/+ 5 61./ min for an a-erage art after ro$uction has achie-e$ stea$y state o eration. MLT 5 61.//60 > 1/0 5 $ "#&$ hr for first art inclu$ing setu *(+ Tp for o eration 3 5 10.2/ min, Rp 5 60/10.2/ 5 $"'$3( pc%hr *c+ ,heoretical ro$uction rate for line 5 $"'$3( pc%hr since station 3 is the (ottlenec' station on the line. 3.2 ,he a-erage art ro$uce$ in a certain (atch manufacturing lant must (e rocesse$ se4uentially through si% machines on a-erage. ,&enty *20+ ne& (atches of arts are launche$ each &ee'. #-erage o eration time 5 6 min., a-erage setu time 5 / hours, a-erage (atch si0e 5 2/ arts, an$ a-erage nono eration time er (atch 5 10 hr/machine. ,here are 17 machines in the lant &or'ing in arallel. 3ach of the machines can (e set u for any ty e of Ao( rocesse$ in the lant. ,he lant o erates an a-erage of 70 ro$uction hours er &ee'. Scra rate is negligi(le. <etermine *a+ manufacturing lea$ time for an a-erage art, *(+ lant ca acity, *c+ lant utili0ation. *$+ .o& &oul$ you e% ect the nono eration time to (e affecte$ (y the lant utili0ation! Solution" *a+ MLT 5 6*/ > 2/*0.1+ > 10+ 5 #$ hr *(+ Tp 5 */ > 2/ % 0.1+/2/ 5 0.30 hr/ c, Rp 5 3.333 c/hr. PC 5 70*17+*3.333+/6 5 )## pc%wee* *c+ 1arts launche$ er &ee' 5 20 % 2/ 5 /00 c/&ee'. 2tili0ation U 5 /00/700 5 0.7143 5 ) "!3+ *$+ #s utili0ation increases to&ar$s 100B, &e &oul$ e% ect the nono eration time to increase. When the &or'loa$ in the sho gro&s, the sho (ecomes (usier, (ut it usually ta'es longer to get the Ao(s out. #s utili0ation $ecreases, &e &oul$ e% ect the nono eration time to $ecrease. 3.3 Case$ on the $ata in the re-ious ro(lem an$ your ans&ers to that ro(lem, $etermine the a-erage le-el of &or'-in- rocess *num(er of arts-in- rocess+ in the lant.

Mfg Metrics-3e-S 11-24, 24/06, 06/04/07 Solution" WIP 5 AU*PC+*MLT+ / SwHsh 5 3.4

(1.0)( 0.7143)( 700)(10/)

70

5 )$# pc

#n a-erage of 20 ne& or$ers are starte$ through a certain factory each month. =n a-erage, an or$er consists of /0 arts that are rocesse$ se4uentially through 10 machines in the factory. ,he o eration time er machine for each art 5 1/ min. ,he nono eration time er or$er at each machine a-erages 7 hours, an$ the re4uire$ setu time er or$er 5 4 hours. ,here are a total of 2/ machines in the factory &or'ing in arallel. 3ach of the machines can (e set u for any ty e of Ao( rocesse$ in the lant. =nly 70B of the machines are o erational at any time *the other 20B are in re air or maintenance+. ,he lant o erates 160 hours er month. .o&e-er, the lant manager com lains that a total of 100 o-ertime machine-hours must (e authori0e$ each month in or$er to 'ee u &ith the ro$uction sche$ule. *a+ What is the manufacturing lea$ time for an a-erage or$er! *(+ What is the lant ca acity *on a monthly (asis+ an$ &hy must the o-ertime (e authori0e$! *c+ What is the utili0ation of the lant accor$ing to the $efinition gi-en in the te%t! *$+ <etermine the a-erage le-el of &or'-in- rocess *num(er of arts-in- rocess+ in the lant. Solution" *a+ MLT 5 10*4 > /0%0.2/ > 7+ 5 &!$ hr%order *(+ Tp 5 *4 > /0%0.2/+//0 5 16.///0 5 0.33 hr/ c, Rp 5 3.0303 c/hr PC 5 *2/%0.70+*160+*3.0303+/10 5 ,(,") pc%month 1arts launche$ er month 5 20%2/ 5 1000 c/month Sche$ule e%cee$s lant ca acity (y 1000 - 868.7 5 30.3 c. ,his re4uires o-ertime in the amount 5 *30.303 c % 10 machines+/*3.0303 c/hr+ 5 100 hr. *c+ 2tili0ation U 5 *1000 c+/*868.7 c+ 5 1.0312/ 5 #3" &$+ *$+ WIP 5 *24/ hr+*868.7 c/mo+*1.0312/+/*160 hr/mo+ 5 $3 "&$ parts

3./

,he mean time (et&een failure for a certain ro$uction machine is 2/0 hours, an$ the mean time to re air is 6 hours. <etermine the a-aila(ility of the machine. Solution" #-aila(ility A 5 *2/0 - 6+/2/0 5 0.876 5 ,)"(+ =ne million units of a certain ro$uct are to (e manufacture$ annually on $e$icate$ ro$uction machines that run 24 hours er $ay, fi-e $ays er &ee', /0 &ee's er year. *a+ )f the cycle time of a machine to ro$uce one art is 1.0 minute, ho& many of the $e$icate$ machines &ill (e re4uire$ to 'ee u &ith $eman$! #ssume that a-aila(ility, utili0ation, &or'er efficiency 5 100B, an$ that no setu time &ill (e lost. *(+ Sol-e art *a+ e%ce t that a-aila(ility 5 0.80. Solution" *a+ ,otal &or'loa$ WL 5 1,000,000*1 min/60+ 5 16,666.7 hr/yr .ours a-aila(le/machine 5 24 % / % /0 5 6000 hr/yr er machine ;um(er of machines n 5 *(+ #t # 5 80B, n 5 16,666.7hr 5 2.77 3 machines 6000hr / machine

3.6

16,666.7hr 5 3.08 ! machines 6000hr / machine* 0.80+

3.7

,he mean time (et&een failures an$ mean time to re air in a certain $e artment of the factory are 400 hours an$ 7 hours, res ecti-ely. ,he $e artment o erates 2/ machines $uring one 7-hour shift er $ay, fi-e $ays er &ee', /2 &ee's er year. 3ach time a machine (rea's $o&n, it costs the com any D200 er hour * er machine+ in lost re-enue. # ro osal has (een su(mitte$ to install a re-enti-e maintenance rogram in this $e artment. )n this rogram, re-enti-e maintenance &oul$ (e erforme$ on the machines $uring the e-ening so that there &ill (e no interru tions to ro$uction $uring the regular shift. ,he effect of this rogram is e% ecte$ to (e that the a-erage M,C9 &ill $ou(le, an$ half of the emergency re air time normally accom lishe$ $uring the $ay shift &ill (e erforme$ $uring the e-ening shift. ,he cost of the maintenance cre& &ill (e D1/00 er &ee'. .o&e-er, a re$uction of maintenance ersonnel on the $ay shift &ill result in a sa-ings $uring the regular shift of D700 er &ee'. *a+ Eom ute the a-aila(ility of machines in the $e artment (oth (efore an$ after the re-enti-e maintenance rogram is installe$. *(+ <etermine ho& many total hours er year the 2/ machines in the $e artment are un$er re air (oth (efore an$ after the re-enti-e maintenance rogram is installe$. )n this art an$ in art *c+, ignore effects of 4ueueing of the machines that might ha-e to &ait for a maintenance cre&. *c+ Will the re-enti-e maintenance rogram ay for itself in terms of sa-ings in the cost of lost re-enues! 7

Mfg Metrics-3e-S 11-24, 24/06, 06/04/07 Solution" *a+ Without re-enti-e maintenance *1M+, a-aila(ility A 5 *400 - 7+/400 5 0.87 5 ,'"#+" With 1M, a-aila(ility A 5 *700 - 7+/700 5 0.88 5 ,,"#+" ,his 88B -alue ignores the fact that half the re air time is on the e-ening shift. )f &e use time of re air $uring the $ay to calculate a-aila(ility, MTTR 5 4 hr, an$ #-aila(ility A 5 *700 - 4+/700 5 0.88/ 5 ,,"$+" *(+ ,otal o erating hours er year 5 / % 7 % /2 5 2070 hr/year. Without 1M, MTBF 5 400 hr. We e% ect 2070/400 5 /.2 (rea'$o&ns/year for each machine. With 2/ machines, (rea'$o&ns/year 5 /.2 % 2/ 5 130. ,otal $o&ntime hours 5 130 % 7 5 #!# hr%-ear. With 1M, MTBF 5 700 hr. ,his means 2070/700 5 2.6 (rea'$o&ns/yr for each machine. With 2/ machines, (rea'$o&ns/year 5 2.6%2/ 5 6/. ,otal $o&ntime hours 5 6/ % 4 5 &(# hr%-ear" *c+ Without 1M, cost of $o&ntime 5 D200 % 1040 $o&ntime hr/yr 5 .&#'/###%-ear With 1M, cost of $o&ntime 5 D200 % 260 $o&ntime hr/yr 5 D/2,000/year #$$itional la(or cost of 1M rogram 5 1/00 - 700 5 D700/&ee' #$$itional la(or cost of 1M rogram/year 5 D700 % /2 5 D41,600/yr ,otal cost er year f 1M 5 D/2,000 > 41,600 5 .,3/(##%-r" Since this is su(stantially lo&er than D207,000/yr, 1M rogram is Austifie$. 3.7 ,here are nine machines in the automatic lathe section of a certain machine sho . ,he setu time on an automatic lathe a-erages 6 hours. ,he a-erage (atch si0e for arts rocesse$ through the section is 80. ,he a-erage o eration time 5 7.0 minutes. 2n$er sho rules, an o erator can (e assigne$ to run u to three machines. #ccor$ingly, there are three o erators in the section for the nine lathes. )n a$$ition to the lathe o erators, there are t&o setu &or'ers &ho erform machine setu s e%clusi-ely. ,hese setu &or'ers are 'e t (usy the full shift. ,he section runs one 7-hour shift er $ay, 6 $ays er &ee'. .o&e-er, an a-erage of 1/B of the ro$uction time is lost is lost $ue to machine (rea'$o&ns. Scra losses are negligi(le. ,he ro$uction control manager claims that the ca acity of the section shoul$ (e 1736 ieces er &ee'. .o&e-er, the actual out ut a-erages only 1440 units er &ee'. What is the ro(lem! Fecommen$ a solution. Solution" .ours/&ee' 5 6 $ays/&' % 7 hr/$ay % *1 - 0.1/+ 5 40.7 hr/&ee'. Tp 5 *6 > 80 % 7/60+/80 5 17 hr/80 c 5 0.2 hr/ c, Rp 5 / c/hr. 1ro$uction ca acity of automatic lathe section PC 5 *40.7 hr/&'+*/ c/hr+*8 machines+ 5 '3( pc%w*. Cut the actual out ut 5 1440 c/&'. Why! Eonsi$er &or'loa$ of the setu men. ;um(er of (atches set u er &ee' 5 *2 setu men+*47 hr/&'+/*6 hr/setu + 5 16 (atches/&'. #t 80 c/(atch, total c/&ee' 5 16 % 80 5 !!# pc%wee* . ,he ro(lem is that the setu &or'ers re resent a (ottlenec'. ,o sol-e the ro(lem, hire one more setu &or'er. 3.8 # certain Ao( sho s eciali0es in one-of-a-'in$ or$ers $ealing &ith arts of me$ium-to-high com le%ity. # ty ical art is rocesse$ se4uentially through ten machines in (atch si0es of one. ,he sho contains a total of eight con-entional machine tools an$ o erates 3/ hours er &ee' of ro$uction time. ,he machine tools are interchangea(le in the sense that they can (e set u for any o eration re4uire$ on any of the arts. #-erage time -alues on the art are" machining time er machine 5 0./ hour, &or' han$ling time er machine 5 0.3 hour, tool change time er machine 5 0.2 hour, setu time er machine 5 6 hours, an$ nono eration time er machine 5 12 hours. # ne& rogramma(le machine has (een urchase$ (y the sho that is ca a(le of erforming all ten o erations in a single setu . ,he rogramming of the machine for this art &ill re4uire 20 hoursG ho&e-er, the rogramming can (e $one off-line, &ithout tying u the machine. ,he setu time &ill (e 10 hours. ,he total machining time &ill (e re$uce$ to 70B of its re-ious -alue $ue to a$-ance$ tool control algorithmsG the &or' han$ling time &ill (e the same as for one machineG an$ the total tool change time &ill (e re$uce$ (y /0B (ecause it &ill (e accom lishe$ automatically un$er rogram control. 9or the one machine, nono eration time is e% ecte$ to (e 12 hours. *a+ <etermine the manufacturing lea$ time for the tra$itional metho$ an$ for the ne& metho$. *(+ Eom ute the lant ca acity for the follo&ing alternati-es" *i+ a Ao( sho containing the eight tra$itional machines, an$ *ii+ a Ao( sho containing t&o of the ne& rogramma(le machines. #ssume the ty ical Ao(s are re resente$ (y the $ata gi-en a(o-e. *c+ <etermine the a-erage le-el of &or'-in- rocess for the t&o alternati-es in art *(+, if the alternati-e sho s o erate at full ca acity. *$+ )$entify &hich of the ten automation strategies *Section 1./.2+ are re resente$ *or ro(a(ly re resente$+ (y the ne& machine. Solution" *a+ 1resent metho$" MLT 5 10*6 > 1 > 12+ 5 ,# hr. ;e& metho$" MLT 5 1*10 > /.3 > 12+ 5 &)"3 hr.

Mfg Metrics-3e-S 11-24, 24/06, 06/04/07 *(+ 1resent metho$" 9or 1 machine, Tc 5 *6 > 1+/1 5 7 hr, Rc 5 1/7 5 0.1428 c/hr 9or 7 machines, lant ca acity PC 5 *7 machines+*3/ hr+*0.1428 c/hr+/*10 o s/ c+ 5 ! orders%wee* ;e& metho$" 9or each machines, Tc 5 *10 > /.3+/1 5 1/.3 hr, Rc 5 1/1/.3 5 0.06/36 c/hr 9or 2 machines, lant ca acity PC 5 *2 machines+*3/ hr+*0.06/36 c/hr+/*1 o / c+ 5 !"$)$ orders%wee* *c+ 1resent metho$" WIP 5 *4 or$ers/&ee'+*180 hr/or$er+/*3/ hr/&'+ 5 & ") orders ;e& metho$" WIP 5 *4./7/ or$ers/&ee'+*27.3 hr/or$er+/*3/ hr/&'+ 5 3"$) orders *$+ #utomation strategies re resente$" Strategy 2 - com(ine$ o erationsG Strategy / - increase$ fle%i(ilityG Strategy 6 - im ro-e$ material han$lingG Strategy 7 - rocess controlG Strategy 8 - lant o erations control. 3.10 # factory ro$uces car$(oar$ (o%es. ,he ro$uction se4uence consists of three o erations" *1+ cutting, *2+ in$enting, an$ *3+ rinting. ,here are three machines in the factory, one for each o eration. ,he machines are 100B relia(le an$ o erate as follo&s &hen o erating at 100B utili0ation" *1+ )n cutting, large rolls of car$(oar$ are fe$ into the cutting machine an$ cut into (lan's. 3ach large roll contains enough material for 4,000 (lan's. 1ro$uction cycle time 5 0.03 minute/(lan' $uring a ro$uction run, (ut it ta'es 3/ minutes to change rolls (et&een runs. *2+ )n indenting, in$entation lines are resse$ into the (lan's to allo& the (lan's to later (e (ent into (o%es. ,he (lan's from the re-ious cutting o eration are $i-i$e$ an$ consoli$ate$ into (atches &hose starting 4uantity 5 2,000 (lan's. )n$enting is erforme$ at 4./ minutes er 100 (lan's. ,ime to change $ies on the in$entation machine 5 30 min. *3+ )n printing, the in$ente$ (lan's are rinte$ &ith la(els for a articular customer. ,he (lan's from the re-ious in$enting o eration are $i-i$e$ an$ consoli$ate$ into (atches &hose starting 4uantity 5 1,000 (lan's. 1rinting cycle rate 5 30 (lan's/min. Cet&een (atches, changeo-er of the rinting lates is re4uire$, &hich ta'es 20 minutes. )n- rocess in-entory is allo&e$ to (uil$ u (et&een machines 1 an$ 2, an$ (et&een machines 2 an$ 3, so that the machines can o erate in$e en$ently as much as ossi(le. Case$ on this $ata an$ information, $etermine the ma%imum ossi(le out ut of this factory $uring a 40-hour &ee', in com lete$ (lan's/&ee' *com lete$ (lan's ha-e (een cut, in$ente$, an$ rinte$+! #ssume stea$y state o eration, not startu . Solution" <etermine ma%imum ro$uction rate Rp for each of the three o erations" = eration *1+ - cutting" Tb 5 3/ min. > 4000 c*0.03 min/ c+ 5 3/ > 120 5 1// min./(atch * 4000 c / (atch+* 60 min./ hr + Rp 5 5 $!'"! pc%hr 1// min./ (atch = eration *2+ - in$enting" Tb 5 30 min. > 2000 c*4.//100 min./ c+ 5 30 > 80 5 120 min./(atch * 2000 c / (atch+* 60 min./ hr + Rp 5 5 ### pc%hr 120 min./ (atch 1000 c = eration *3+ - rinting" Tb 5 20 min. > 5 20 > 33.33 5 /3.33 min./(atch 30 c / min. *1000 c / (atch+* 60 min./ hr + Rp 5 5 &$ pc%hr /3.33 min./ (atch Cottlenec' rocess is o eration *2+. Wee'ly out ut 5 *40 hr/&'+*1000 c/hr+ 5 !#/### 0lan*s%w* .

Costs o1 Manu1acturin2 3perations

3.11 ,heoretically, any gi-en ro$uction lant has an o timum out ut le-el. Su ose a certain ro$uction lant has annual fi%e$ costs FC 5 D2,000,000. :aria(le cost VC is functionally relate$ to annual out ut Q in a manner that can (e $escri(e$ (y the function VC 5 D12 > D0.00/Q. ,otal annual cost is gi-en (y TC 5 FC > VC % Q. ,he unit sales rice for one ro$uction unit P 5 D2/0. *a+ <etermine the -alue of Q that minimi0es unit cost UC, &here UC 5 TC/QG an$ com ute the annual rofit earne$ (y the lant at this 4uantity. *(+ <etermine the -alue of Q that ma%imi0es the annual rofit earne$ (y the lantG an$ com ute the annual rofit earne$ (y the lant at this 4uantity. Solution" *a+ TC 5 2,000,000 > *12 > 0.00/H+H 5 2,000,000 > 12 H > 0.00/ H2 UC 5 TC 2, 000, 000 5 > 12 > 0.00/Q Q Q 5 2, 000, 000 >0.00/ 5 0 Q2

d ( UC ) dQ

10

Mfg Metrics-3e-S 11-24, 24/06, 06/04/07 0.00/Q2 5 2,000,000 Q2 5 400 % 106 Q 5 20 % 103 5 &#/### pc 1rofit 5 2/0*20,000+ - *2,000,000 > 12*20,000+ > 0.00/*20,000+2+ 5 .)(#/###%-r *(+ 1rofit 5 2/0 Q -*2,000,000 > 12 Q > 0.00/ Q2+ 5 237 Q - 2,000,000 - 0.00/ Q2 d 5 237 6 2*0.00/Q+5 237 - 0.010 Q 5 0 Q 5 237/0.010 5 &3/'## pc dQ 1rofit 5 2/0*23,700+ - *2,000,000 > 12*23,700+ > 0.00/*23,700+2+ 5 .'3&/&##%-r 3.12 Eosts ha-e (een com ile$ for a certain manufacturing com any for the most recent year. ,he summary is sho&n in the ta(le (elo&. ,he com any o erates t&o $ifferent manufacturing lants, lus a cor orate hea$4uarters. <etermine *a+ the factory o-erhea$ rate for each lant, an$ *(+ the cor orate o-erhea$ rate. ,he firm &ill use these rates in the follo&ing year.

3% ense category <irect la(or Materials 9actory e% ense Eor orate e% ense

1lant 1 D1,000,000 D3,/00,000 D1,300,000

1lant 2 D1,7/0,000 D4,000,000 D2,300,000

Eor orate hea$4uarters

D/,000,000 1,300,000 5 1.30 5 3#+ 1,000,000

Solution" *a+ 1lant 1" 9actory o-erhea$ rate FOHR1 5 1lant 2" 9actory o-erhea$ rate FOHR2 5

2,300,000 5 1.3143 5 3 "!3+ 1,7/0,000 /,000,000 *(+ Eor orate o-erhea$ rate COHR 5 5 1.7172 5 ' "'&+ 1,000,000 + 1,7/0,000 3.1 ,he hourly rate for a certain &or' center is to (e $etermine$ (ase$ on the follo&ing $ata" $irect la(or rate 5 D1/.00/hrG a lica(le factory o-erhea$ rate on la(or 5 3/BG ca ital in-estment in machine 5 D200,000G ser-ice life of the machine 5 / yearsG rate of return 5 1/BG sal-age -alue in fi-e years 5 0eroG an$ a lica(le factory o-erhea$ rate on machine 5 40B. ,he &or' center &ill (e o erate$ t&o 7-hour shifts, 2/0 $ays er year. <etermine the a ro riate hourly rate for the &or' center. Solution" *A/P,i,n+ 5 *A/P,1/B,/+ 5 5 0.2873 *1 + 01/ . +/ 1 UAC 5 D200,000*0.2873+ 5 D/8,663/yr .ours/yr 5 *16 hr/$ay+*2/0 $ays/yr+ 5 4000 hr/yr, so Cm 5 /8,663/4000 5 D14.82/hr Ii-en CL 5 D1/.00/hr, Co 5 1/.00*1 > 0.3/+ > 14.82*1 > 0.40+ 5 .! " 3%hr 3.2 )n the re-ious ro(lem if the &or'loa$ for the cell can only Austify a one shift o eration, $etermine the a ro riate hourly rate for the &or' center. Solution" Same UAC as in re-ious solution" UAC 5 D/8,663/yr, Cm 5 /8,663/2000 5 28.73/hr Co 5 1/.00*1 > 0.3/+ > 28.73*1 > 0.40+ 5 .(&"# %hr 3.3 )n the o eration of a certain ro$uction machine, one &or'er is re4uire$ at a $irect la(or rate 5 D10/hr. # lica(le la(or factory o-erhea$ rate 5 /0B. Ea ital in-estment in the system 5 D2/0,000, e% ecte$ ser-ice life 5 10 years, no sal-age -alue at the en$ of that erio$, an$ the a lica(le machine factory o-erhea$ rate 5 30B. ,he &or' cell &ill o erate 2000 hr/yr. 2se a rate of return of 2/B to $etermine the a ro riate hourly rate for this &or' cell. Solution" *A/P,2/B,10+ 5 0.2/*1 + 0.2/+10 *1 + 0.2/+10 1 5 0.2701 01/ . *1 + 01/ . +/

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Mfg Metrics-3e-S 11-24, 24/06, 06/04/07 UAC 5 2/0,000*0.2701+ 5 70,02//year Machine rate Cm 5 70,02//2000 5 D3/.01 Co 5 10.00*1 > 0./0+ > 3/.01*1 > 0.30+5 .(#"$&%hr 3.4 )n the re-ious ro(lem, su ose that the machine &ill (e o erate$ three shifts, or 6000 hr/yr, instea$ of 2000 hr/yr. ;ote the effect of increase$ machine utili0ation on the hourly rate com are$ to the rate $etermine$ in the re-ious ro(lem. Solution" *A/P,2/B,10+ 5 0.2701 as in re-ious ro(lem. UAC 5 2/0,000*0.2701+ 5 70,02//year Machine rate Cm 5 70,02//6000 5 D11.67 Co 5 10.00*1 > 0./0+ > 11.67*1 > 0.30+5 .3#" )%hr 3./ ,he (rea'-e-en oint is to (e $etermine$ for t&o ro$uction metho$s, one a manual metho$ an$ the other automate$. ,he manual metho$ re4uires t&o &or'ers at D8.00/hr each. ,ogether, they ro$uce at a rate of 36 units/hr. ,he automate$ metho$ has an initial cost of D12/,000, a 4-year ser-ice life, no sal-age -alue, an$ annual maintenance costs 5 D3000. ;o la(or *e%ce t for maintenance+ is re4uire$ to o erate the machine, (ut the o&er re4uire$ to run the machine is /0 'W *&hen running+. Eost of electric o&er is D0.0//'Wh. )f the ro$uction rate for the automate$ machine is 100 units/hr, $etermine the (rea'-e-en oint for the t&o metho$s, using a rate of return 5 2/B. Solution" Manual metho$" -aria(le cost 5 *2 &or'ers+*D8.00/hr+/*36 c/hr+ 5 D0./0/ c ,otal cost as a function of Q is TC 5 0./0 Q assuming no fi%e$ costs. 0.2/*1 + 0.2/+ 4 #utomate$ metho$" *A/P,2/B,4+ 5 5 *0.4234+ *1 + 0.2/+ 4 1 UAC 5 12/,000*#/1,2/B,4+ > 3000 5 12/,000*0.4234+ > 3000 5 D//,830/yr */0'&h / hr +*D0.0/ / '&h+ :aria(le cost 5 5 0.02// c 100 c / hr ,otal cost as a function of Q 5 //,830 > 0.02/ Q Crea'-e-en oint" 0./0 Q 5 //,830 > 0.02/ Q, 0.47/Q 5 //,830 Q 4 )/)!) pc%-r 117,747 c / yr .ours of o eration er year" Manual" H 5 5 3270.76 hr/yr. 36 c / hr Comment" ,his &oul$ re4uire t&o shifts. 117,747 c / yr #utomate$" H 5 5 1177.47 hr/yr. 100 c / hr Comment" 1lenty of a$$itional ca acity in one shift (eyon$ the (rea'-e-en oint.

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