CH_05_10th_Edition

# CH_05_10th_Edition - Strategic Capacity Planning for...

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Strategic Capacity Planning for Products and Services CHAPTER 5 STRATEGIC CAPACITY PLANNING FOR PRODUCTS AND SERVICES PROBLEMS P1. The Crystal Sparkle Co. produces glass tumblers. The plant is designed to produce 400 tumblers per hour, and there is one eight-hour shift per working day. However, the plant does not operate for the full eight hours: the employees take two 15-minute breaks in each shift, one in the first four hours and one in the second four hours, and the first thirty minutes of the shift are spent raising the kilns to the required temperature for firing glass. The plant usually produces about 10,000 tumblers per five-day workweek. Answer the following questions by adjusting the data to one eight-hour shift. a. What is the design capacity of the plant in tumblers, per shift? b. What is the effective capacity in tumblers per shift? c. What is the actual output in tumblers per shift? d. What is the efficiency ratio? e. What is the utilization ratio? P2. The Goode and Cooke Company produces several models of frying pans. There is little difference in the production time required for the various models; the plant is designed to produce 160 frying pans per eight-hour shift, and there are two shifts per working day. However, the plant does not operate for the full eight hours: the employees take two 12-minute breaks in each shift, one in the first four hours and one in the second four hours; two hours per week are devoted to cleaning the factory and performing maintenance on the machines; one four-hour period every four weeks is devoted to the meeting of the quality circle. The plant usually produces about 3,500 frying pans per four-week period. You may ignore holidays in solving this problem. Answer the following questions by adjusting the data to a four-week time period. a. What is the design capacity in frying pans? b. What is the effective capacity in frying pans? c. What is the actual output? d. What is the efficiency? e. What is the utilization? f. Re-work the problem using a time period of one eight-hour shift. P3. The selling price of the product is \$199.95. The variable costs per unit are: Labor \$60.25 Raw material \$25.70 Purchased component \$21.50 Variable overhead \$17.50 The fixed costs total \$300,000 per year. Perform a cost-volume (breakeven) analysis of this company. a. State total revenue as a formula, for any given volume of Q products. 1

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Strategic Capacity Planning for Products and Services b. State total cost as a formula, for any given volume of Q products. c.
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## This note was uploaded on 04/20/2011 for the course TOM 301 taught by Professor Williamcosgrove during the Spring '08 term at Cal Poly Pomona.

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CH_05_10th_Edition - Strategic Capacity Planning for...

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