A company manufactures a product using two machine cells. Each cell has a design capacity of 250 units per day and an effective capacity of 230 units per day. At present, actual output averages 200 units per cell, but the manager estimates that productivity improvements soon will increase output to 223 units per day. Annual demand is currently 60,000 units. It is forecasted that within two years, annual demand will triple. How many cells should the company plan to acquire to satisfy predicted demand under these conditions? Assume 236 workdays per year. Cells
Actual output will be 223 per day per cell;
236 Working days/year
Projected annual demand is as follow
Current demand is 60,000 units and in the sum we have been proivided with the information that within two years, annual demand will triple
So future demand is
=60000 x 3
=180,000 units
Annual capacity per cell = 221 units/day
×236 days/year
= 52,628
| Cell | 180000 |
| 52628 | |
| 3.420232576 |
the plant operates 236 days per year, daily production
= 180,000 / 236 = 763 units per day.
Each cell currently produces 200 units per day so the company needs 763 / 200 = 3.82 cells (4 cells). You must round up because you can not purchase a partial cell.
Also, this is based on current production. If the manager is right and they can increase productivity to 224 units per day per cell, they would need 763 / 223 = 3.42 cells (again 4 cells because you must round up).
If they want to reduce their purchase to 3 cells then they need to increase the number of work days or add shifts. Also, you only need 3 cells based on the design capacity of 250 units per day but design capacity does not allow for any downtime due to equipment repair or maintenance.
