Unformatted text preview: BMGT 322 - Operations Management
Break-Even Analysis Practice Problem IV Solution
The following diagram shows a 4-step process that begins with Operation 1 and ends
with Operation 4. The rates shown in each box represent the effective capacity of
12 / hr.
15 / hr.
11 / hr.
14 / hr.
a. Determine the capacity of this entire process.
The capacity of the entire process is that of the lowest individual capacity, that of Operation 3, or
b. Which action would yield the greatest increase in process capacity?
1) Increase the capacity of Operation 1 by 15%
2) Increase the capacity of Operation 2 by 10%
3) Increase the capacity of Operation 3 by 10%
Increasing Operation 1 or 2 would not be effective unless Operation 3 is increased first as Operation 3
is the bottleneck. Increasing Operation 3 by 10% would increase it to 11*1.1 = 12.1 units per hour
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