Problem 1 Knott's Industries manufactures three models of backyard swings: Standard, Deluxe, and Premium. Currently it has five identical swing-set-making machines. Which are operated 8 hours each day, 5 days a week, 50 weeks per year. A capacity cushion of 18% is desired. The following information is also known: Lot Size (units/lot) Model Time Annual Demand Forecast Processing (min/unit) Setup (min/lot) Pessimistic Expected Pessimistic Standard 8. 30 50 15,000 18,000 28,000 Deluxe 10 40 40 12,000 15,000 23,000 Premium 14 50 30 6,000 12,000 14,000 a. Does Knott's have sufficient capacity to meet the minimum (pessimistic) demand, the expected demand, and the maximum (optimistic) demand? If not, how many more machines are needed in each case? b. If Knott's was able to reduce the setup time for all three models by 50% and triple the lot size for each model by implementing process improvements, would there be enough current capacity to produce 15,000 units of each type of swing? Show your work and explain. c. What is the maximum capacity cushion that is necessary for Knott to have enough capacity to meet the expected demand?

Problem 1 Knott's Industries manufactures three models of backyard swings: Standard, Deluxe, and Premium. Currently it has five identical swing-set-making machines. Which are operated 8 hours each day, 5 days a week, 50 weeks per year. A capacity cushion of 18% is desired. The following information is also known: Lot Size (units/lot) Model Time Annual Demand Forecast Processing (min/unit) Setup (min/lot) Pessimistic Expected Pessimistic Standard 8. 30 50 15,000 18,000 28,000 Deluxe 10 40 40 12,000 15,000 23,000 Premium 14 50 30 6,000 12,000 14,000 a. Does Knott's have sufficient capacity to meet the minimum (pessimistic) demand, the expected demand, and the maximum (optimistic) demand? If not, how many more machines are needed in each case? b. If Knott's was able to reduce the setup time for all three models by 50% and triple the lot size for each model by implementing process improvements, would there be enough current capacity to produce 15,000 units of each type of swing? Show your work and explain. c. What is the maximum capacity cushion that is necessary for Knott to have enough capacity to meet the expected demand?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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