Suppose an engineer who recognized the importance of elevating the constraint pr
ID: 444162 • Letter: S
Question
Suppose an engineer who recognized the importance of elevating the constraint presented the following proposal to modify the system:
Buy some additional equipment and decrease work center C’s operation time on both RM1 and RM2 by 50% each at the cost of $200,000. Also, reduce work center B’s operation time on RM2 by 40% at the cost of $50,000. The above modification on work center C in (i) and B in (ii) requires increase in work center D’s operation time by 2 minutes/unit for both products P and Q at no additional cost.
Discuss if the engineer’s proposal is feasible. If it is implemented, how much profit would be expected?
(4) Consider a small production system for manufacturing two products, P and Q, as shown below. The goal of this system is to maximize profit. Demand per week Sellimg price Raw material costs 110 units $110 unit 70 units $75/unit $20 unit S24/unit RM1 RM2 RM3 Purchased $24/unit $20 unit S5/unit 2,400 mimutes each Time available on work centers (A, B, C, and D): Operating expenses per week: Supply of raw materials and purchased parts: Unlimited S6,000/week (10mm unit) (5mnunit) Purchased (12mim unit) (10mm unit) (9mn unit) (14mm unit) (10mm unit) (10mm unit) RM3Explanation / Answer
Suppose an engineer who recognized the importance of elevating the constraint presented the following proposal to modify the system:
Buy some additional equipment and decrease work center C’s operation time on both RM1 and RM2 by 50% each at the cost of $200,000. Also, reduce work center B’s operation time on RM2 by 40% at the cost of $50,000. The above modification on work center C in (i) and B in (ii) requires increase in work center D’s operation time by 2 minutes/unit for both products P and Q at no additional cost.
Discuss if the engineer’s proposal is feasible. If it is implemented, how much profit would be expected?
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Answer :
Given Information :
An Engineer who recognized the importance of elevating the constraint presented the following proposal to modify the system:
Change in system for minimizing the constraints .
1 ) Buy some additional equipment and decrease work center C’s operation time on both RM1 and RM2 by 50% each at the cost of $200,000.
2 ) Also, reduce work center B’s operation time on RM2 by 40% at the cost of $50,000.
The above modification on work center C in (i) and B in (ii) requires increase in work center D’s operation time by 2 minutes/unit for both products P and Q at no additional cost.
Profit Structure :
New Timings :
For Product P :
Time per unit =
Previously this time was = 36 min / unit
For Product Q =
Previously this time was = 24 min /unit
Now if we see carefully then there is time reduction in product P , but increase in product Q.
From above information we can conclude that
1) Product P can go with Engineers proposals
2)For Product Q engineers proposals need to be changed as in new case timing is increasing. We.We have limitation about time .Only 2400 min / week
3)Though the addition of operations in D are not generating any cost but they need extra time, which is affecting on product Q time structure.
So up gradation need for Product Q.
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Tentative profit is shown in table no 1.
P Q Demand Per week 110 70 Selling Price $110/unit 12100 $75/unit 5250 Raw Material 1 $ 20/unit 2200 Raw Material 2 $24/unit 2640 $24/unit 1680 Raw Material 3 $ 20/unit 1400 Purchased Part $ 5/unit 550 Profit 6710 2170