solution

Capacity Requirements Planning

A company sells 3 products. Machine A or machine B can be used to manufacture all of them. A machine of type A costs $56,000. A machine of type B costs $62,000. Further, suppose that it costs $12.65 for machine A, and $16.85 for machine B for every working hour in terms of operating costs. The efficiency rating of type A machine is 0.86, and type B machine, 0.92. The demand rates for the products and the processing times in minutes are given below.

Processing Time in Minutes

Calculate the number of machines of each type required to meet the entire demand and identify the type with the lowest total costs (i.e., purchase costs + operating costs). Assume that there are 250 working days in a year, with 9 hours in each day. Answer the following questions. (Hint: To calculate the total operating costs, multiply the total working hours of each type of machines by the hourly operating costs.)

What is the total number of hours needed to produce all the products on type A machines?

Refer to Problem #4 in question 33

What is the total number of hours needed to produce all the products on type B machines?

Refer to Problem #4 in question 33

What is the total number of machines of type A needed to produce all the products?

(you have to round-up the number of machines needed)

Refer to Problem #4 in question 33

What is the total number of machines of type B needed to produce all the products?

(Hint: you have to round-up the number of machines needed)

Refer to Problem #4 in question 33

What are the total operating costs on machines of type A?

Refer to Problem #4 in question 33

What are the total operating costs on machines of type B?

Refer to Problem #4 in question 33

What are the total costs (purchase costs + operating costs) of machines of type A?

Refer to Problem #4 in question 33

What are the total costs (purchase costs + operating costs) of machines of type B?