hw8_solutions_rev_rev - Solutions to HW #8 IEOR 130 1. (a)...

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1 Solutions to HW #8 IEOR 130 1. (a) The revenue gain from a one-day reduction in cycle time is expressed as () . 1 1 0 = Δ α H CT e e WYP e R The value of α satisfies 365 50 . 0 = e or α = 0.001899. The value of one day of cycle time is then () () ( ) 001899 . 0 1 00 . 10 600 7 000 , 50 1 ) 730 )( 001899 . 0 ( ) 50 )( 001899 . 0 ( 001899 . 0 = Δ e e e R or = Δ R (0.0019008)(7142.86)(6000.00)(0.9094)(394.9415) or 200 , 258 , 29 $ = Δ R . (b) Cycle time reduction results in a one-time reduction in working capital requirements (due to the reduction in WIP). Cycle time reduction may also increase the speed of yield improvement, resulting in higher average die yield and hence lower die cost. (c) The revenue gain from a 10-day reduction in cycle time is expressed as () . 1 1 0 10 = Δ H CT e e WYP e R The value of 10 days of cycle time is then () () ( ) 001899 . 0 1 00 . 10 600 7 000 , 50 1 ) 730 )( 001899 . 0 ( ) 50 )( 001899 . 0 ( 001899 . 0 ) 10 ( = Δ e e e R or = Δ R (0.019714)(7142.86)(6000.00)(0.9094)(394.9415) or 110 , 449 , 303 $ = Δ R . (d) Comparing (a) and (c), we see that the value of cycle time reduction grows slightly
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hw8_solutions_rev_rev - Solutions to HW #8 IEOR 130 1. (a)...

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