Macon Controls produces three different types of control units used to protect industrial equipment from overheating.
Each of these units must be processed by a machine that Macon considers to be their process bottleneck. The plant operates on two 8-hour shifts, 5 days per week, 52 weeks per year. Table 6.2 provides the time standards at the bottleneck, lot sizes, and demand forecasts for the three units. Because of demand uncertainties, the operations manager obtained three demand forecasts (pessimistic, expected, and optimistic). The manager believes that a 20 percent capacity cushion is best.
a. How many machines are required to meet minimum (Pessimistic) demand, expected demand, maximum (Optimistic) demand?
b. How many machines are required if the operations manager decides to double lot sizes?
c. If the operations manager has three machines and believes that the plant can reduce setup time by 20 percent through process improvement initiatives, does that plant have adequate capacity to meet all demand scenarios without increasing lot sizes?
Time standard
Component
A
B
C
Processing (hr/unit)
0.05
0.20
0.05
Setup (hr/lot)
1.0
4.5
8.2
Lot Size (units/lot)
60
80
120
Demand Forecast
Pessimistic
15,000
10,000
17,000
Expected
18,000
13,000
25,000
Optimistic
25,000
17,000
40,000