IS-4 - such resource has excess capacity (measured in #...

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OM 335 Bagchi Name: SOLUTION Individual Homework-4 Upon graduation, you visit Rox Cable’s Midland facility which manufactures coaxial cables. You are taken to a corner of the plant where product P1 is produced by processing material through four resources (R1, R2, R3, and R4) in sequence. There are 480 minutes of processing time available per day at each resource. Product P1 requires 20, 24, 30, and 16 minutes of processing time per unit at resources R1, R2, R3, and R4, respectively. Demand for P1 is 20 units per day. Each unit of P1 generates $60 in gross margin contribution. (a) Characterize each resource as either a bottleneck or a non-bottleneck. Resource: R1 R2 R3 R4 Capacity (# units/day): 24 20 16 30 Bottleneck: R3 Non-bottleneck: R1, R2, R4 (b) Calculate the marginal value of 1 hour lost at each of the four resources. Each non-bottleneck resource will end up working at the rate of the bottleneck, which means that each
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Unformatted text preview: such resource has excess capacity (measured in # units/day) or idle time (measured in # hours/day) as shown below. Resource: R1 R2 R3 R4 Excess Capacity (# units/day): 8 4 14 Idle Time (hours/day): 2.66 1.6 3.73---------------------------------------------------R1, R2, R4 R3---------------------------------------------------Value of 1 hour lost $0 (2 units)($60/unit) = $120------------------------------------------------------------------------------------------------------(c) Suppose process investment has reduced the processing time per unit at resource R3 from 30 to 24 minutes. Which resource(s) would be bottlenecks now? Both R2 and R3 are bottlenecks now. Note however, because of dependent events and statistical fluctuations, R3 will tend to fall behind R2. Hence, R3 would be the true bottleneck....
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