Capacity Planning For Products and Services: Management Coursework

Capacity Planning For Products and Services
Name MGMT 339Instructor Date
11. Assume that only the purchasing costs are being considered. Which machine would have the lowest total cost, and how many of that machine would be needed? Machines operate 10 hours a day, 250 days a year.
10 hours a day= 600 minutes (10*60)
In 250 days = 150,000 minutes (600min*250 days)

Total processing time

 


Product

Annual Demand

Processing time per unit (minutes)



A

B

C

1

16,000

16,000*3=48,000

16,000*4=64,000

16,000*2=32,000

2

12,000

12,000*4=48,000

12,000*4=48,000

12,000*3=36,000

3

6,000

6,000*5=30,000

6,000*6=36,000

6,000*4=24,000

4

30,000

30,000*2=60,000

30,000*2=60,000

30,000*2=30,000






Processing time

186,000

208,000

122,000

NA=186,000/150, 000 =1.24 ≈ 2 machines
NB=208,000/150, 000=1.39 ≈2 machines
NC= 122,000/150, 000=0.81 ≈ 1 machine
Machine

Cost

No. of machine (s)

Cost of Machine

A

$40,000

2

$40,000 *2=$80,000

B

$30,000

2

$30,000 *2=$60,000

C

$80,000

1

$80,000 *1=$80,000

Thus, buy 2 “B” machines at a cost of $ 60,000, rather than but 2 Machine ‘A” at $ 80,000 or one machine “C” at $ 80,000.
b. Consider this additional information: The machines differ in terms of hourly operating cost...