Unit 2 Assignment 1 - Demand Calculation
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Unit 2 Assignment 1 - Demand Calculation
Unit 2 Assignment 1 - Demand Calculation
Chaunte’l Brown
Herzing University
Operations Management
Dr. Thomas Shaefer
January 21, 2024
2
Unit 2 Assignment 1 - Demand Calculation
1.
Distinguish between design capacity and system capacity.
a.
Design capacity refers to the maximum output or production that a system or facility is designed to achieve under ideal conditions. It is determined based on factors such as size, layout, in specifications of the system. On the other hand, system capacity refers to the actual output or production that a system can achieve
in real world operating conditions, taking into account factors such as equipment efficiency, maintenance downtimes, and other operational constraints. Well design capacity represents the theatrical maximum, system capacity reflects the practical limitations and performance of this system in practice.
2. A manufacturer of TV watches uses three TRS7 electronic chips in each TV watches produced. Demand estimates for the number of TV watches that could be sold next year are shown.
Demand X
20000
40000
50000
P (X)
0.30
0.50
0.20
A.
Assuming the firm decides to produce on a expected value basis, how many TRS7 chips should they plan to produce for next year's sales?
A.
To determine how many TRS7 chips should be planned for next year's sales on an
expected value basis, we need to calculate the expected demand for TV watches. The expected demand is calculated by multiplying each demand estimate by its respective probability and then summing them up. Expected demand = (demandX probability) + (demandX probability) + (demandX probability) =(20000 * .30) = (40000 * .50) = (50000 * .20) = 6000 + 2000 + 1000
= 36000
Therefore, the firm should plan to produce 36,000 chips for next year's sales if they decide to produce on an expected value basis.
B.
What capacity is required to meet 150 percent of expected demand.
A.
To meet 150% of expected demand, the firm would need to produce 54,000 TRS7
chips. This can be calculated by multiplying the expected demand of 36,000 chips
by 1.5.
2.
An automatic drive-in teller at American National Bank has the capacity of handling 2,000 entries per regular banking day (according the the firm that sold it to the bank). However, because of limitations imposed by automobile access, the teller is available only 60 per cent of the time. It is actually being used for about 800 entries per day. What is the system efficiency?
3
Unit 2 Assignment 1 - Demand Calculation
a.
The system efficiency can be calculated by dividing the actual usage (800 entries per day) by the maximum capacity (2000 entries per day) and then multiplying by
100 to get a percentage. The system efficiency in this case would be 40%.
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