bottleneck

Suppose that the system starts each day with enough levels of WIP in each work center queue. How much output can we expect from the system in a day?

The system’s maximum production in a single day would be 10, 500.

At center 3, what level of equipment utilization should the company aspire for?

The organization should strive for 100 percent equipment utilization at work

Your employer feels that in order to keep units low, all of the equipment should be kept occupied at all times. What happens if work centers 1 and 2 are operated at 100 percent utilization? In particular, what is the effect on system? What is the effect in WIP? What should the utilization be at work center 2?

Incase work center 1 and 2 are operated at 100 percent utilization, there will be traffic in the entire system. The work in progress will increase drastically and be in excess as a result of operating the two centers at 100 percent utilization. The utilization at work center 2 should be at least 90 percent.

An employee team has an idea for a process improvement that will reduce breakdowns at work center 4. This will raise the effective capacity at this work center to 13,500 units per day. The cost of making this improvement is $10,000. Another team has an idea for a process improvement that will reduce breakdowns at work center 3. This will raise the effective capacity at this work center to 11,000 units per day. The cost of making this improvement is $20,000.

Which team has the best idea for process improvement that will reduce breakdowns at work center 3 and 4? Or are both ideas good? Is it cost effective?

The second team that aims at reducing the breakdowns at center 3 has the best idea for process improvement. The idea is cost effective since it will increase the effective capacity at work center 3 by 500 from 10,500 to 11,000 at a cost of $ 20,000. Despite the cost appearing to be high initially, in the long run it is cheap since it will reduce the set up time effectively and reduce breakdowns at the center hence leading to process improvement. By contrast, the second team aims at raising the effective capacity of the work center 4 by 1,500 at a cost of $ 10,000. The idea is valid too but in this system, any investments that lead to process improvement should be targeted at work center 3 since it will be more efficient to reduce breakdowns at the center and for the entire system.

References

Chapter 4 of Operations and Supply Chain Management for the 21st century, 1st edition at https://login.cengage.com/cb/login.htm