Operations Management ¦ ¦ Assignment 1 Page | 1 of 8

1. Ch 7 OQ15 – The Goodparts Company produces a component that is subsequently used in the
areospace industry. The component consists of three parts (A,B,C) that are purchased from outside and
cost 40, 35 and 15 cents per piece respectively. Parts A and B are assembled first on the assembly line1,
which produces 140 components per hour. Part C undergoes a drilling operation before being finally
assembled with the output from assembly line 1. There are in total 6 drilling machines, but at present only
3 of them are operational. Each drilling machine drills part C at the rate of 50 parts per hour. In the final
assembly the output from assembly line 1 is assembled with the drilled part C. The final assembly line
produces at the rate of 160 components per hour. At present components are produced 8 hours a day 5
days a week. Management believes that if need arises, it can add a second shift of eight hours for the
assembly lines.
The cost of assembly labor is 30 cents per part for each assembly line; the cost for drilling labor is
15 cents per part. For drilling, the cost of electricity is 1 cent per part. The total overhead cost has been
calculated as $1200 per week. The depreciation for equipment has been calculated as $30 per week.

a. Draw a process flow diagram and determine the process capacity (no. of components
produced per week) of the entire process.
Throughput Secs Cycle Time Secs

LEGEND

Resources # Capacity comps/hr

25.71429 25.71429

Assemble Part A and B

24 24
1 Asm. Line 140 comps/hr
Final Assembly

1 Asm. Line 160 comps/hr

72 24

Drill Part C

3 Drills 150 comps/hr

No. of hours per day = 8; No. of days per week = 5

No. of hours per week = 8 x 5 = 45
No. of secs per week = 45 x 60 x 60 = 162000
Operations Management ¦ ¦ Assignment 1 Page | 2 of 8

The current bottleneck is Assembly line 1 with 140 components per hour.
So capacity per week = 140 x 45 = 6300 components per week
Alternately:
Bottleneck Total timeavlbl−throughput time
Capacity per week= +1
Cycle Time

162000−( 25.71429+ 24)

¿ +1
25.71429
≈ 6299 components per week

b. Suppose a second shift of 8 hours is run for assembly line 1 and the same is done for
final assembly line. In addition, 4 of the six drilling machines are made operational. The
drilling machines, however, operate for just 8 hours a day. What is the new process capacity
(no. of components produced per week)? Which of the 3 operations limits the capacity?
Throughput Secs Cycle Time Secs

LEGEND

Resources # Capacity comps/WEEK

25.71429 25.71429

Assemble Part A and B

24 24
1 Asm. Line 11200 comps/wk
Final Assembly

1 Asm. Line 12800 comps/wk

96 24

Drill Part C

4 Drills 8000 comps/week

New capacity per week for Assembly line 1 = 140 x 16 x 5 = 11200 components/week
New Capacity per week for Final Assembly = 160 x 16 x 5 = 12800 components/week
New Capacity per week for Drilling process = 50 x 4 x 8 x 5 = 8000 components/week
The new bottleneck is the Drilling process that limits the capacity to 8000 components per week.
Operations Management ¦ ¦ Assignment 1 Page | 3 of 8

c. Management decides to run a second shift of 8 hours for assembly line 1 and 4 hours for
final assembly line. In addition, 5 of the six drilling machines are made operational for 8
hours a day. What is the new process capacity? Which of the 3 operations limits the
capacity?

25.71429 25.71429

Assemble Part A and B

24 24
1 Asm. Line 11200 comps/wk
Final Assembly

1 Asm. Line 9600 comps/wk

120 24

Drill Part C

5 Drills 10000 comps/wk

New capacity per week for Assembly line 1 = 140 x 16 x 5 = 11200 components/week
New Capacity per week for Final Assembly = 160 x 12 x 5 = 9600 components/week
New Capacity per week for Drilling process = 50 x 5 x 8 x 5 = 10000 components/week

The new process capacity is 9600 components per week.

The final assembly operation limits the overall capacity.

d. Determine the cost per unit output for questions (b) and (c).
Costs (b) 8000 units/wk (c) 9600 units/wk
Overhead Costs $1200 /week $0.15 $0.125
Depreciation $30 /week $0.00375 $0.003125
Electricity $0.01 /part $0.01 $0.01
Labor $0.30 + $0.30 + $0.75 $0.75
$0.15 /part
Total Cost per unit 91.375 cents 88.8125 cents
e. The product is sold at $4.00 per unit. Assume that the cost of a drilling machine is
$30,000 and the company produces 8,000 units per week. Assume that four drilling machines
are used for production. If the company has the option to buy the same part at $3.00 per unit,
what would be the break-even number of units?
Let Q = breakeven quantity
V1 = Variable Costs per unit = 91.375 cents (from question d above)
F1 = Total Fixed costs for 4 drilling machines = 4 x $30,000 = $120,000
Operations Management ¦ ¦ Assignment 1 Page | 4 of 8

Total Costs TC1 = F1 + V1Q

V2 = Variable Costs per unit if bought = $ 3.00

F2 = Total Fixed costs if bought = 0
Total Costs TC2 = F2 + V2Q = V2Q

For breakeven quantity, where either choice would not make a difference, the total costs for both
options should be equal:
TC1 = TC2
F1 + V1Q = V2Q
120000 + 0.91375 Q = 3Q
Q = 120000 / 2.08625
≈ 57,520 units
Operations Management ¦ ¦ Assignment 1 Page | 5 of 8

2. Ch 11 OQ 15 – The following represents a process used to assemble a chair with upholstered seat.
Stations A, B, C make the seat; stations J,K, L assemble the chair frame; Station X is where the two sub
assemblies are brought together; and some final tasks are completed in station Y & Z. One worker is
assigned to each of the stations. the line is paced using a countdown clock to sychronize production at
each station. Generally, there is no inventory kept anywhere in the system, althoug there is room for one
unit between each of the stations that might be used for a brief amount of time.

Given the following amount of work in seconds required at each station.

A 38 secs J 32 secs X 22 secs

B 34 secs K 30 secs Y 18 secs
C 35 secs L 34 secs Z 20 secs

38

A TPT secs
34
757

B
847 35 LEGEND

C 18 20
22
822
X Y Z Capacity output/day
34
1309 1600 1440
L
30
847

K
32
960

J
900

Since 1 resource is used for each station, here throughput time = cycle time.
a. What is the possible daily output of this process if 8 hours of processing time is available
each day?

Cycle time for the entire process = Cycle time for bottleneck (A) = 38 secs
Bottleneck Total timeavlbl−throughput time
Capacity per day= +1
Cycle Time
Operations Management ¦ ¦ Assignment 1 Page | 6 of 8

8∗60∗60−167
= +1
38
=754.5 ≈ 754 chairs per day

b. Given your output rate in part (a), what is the efficiency of the process?

Efficiency = Actual Output rate/ Standard Output rate.

Actual output = 754 chairs per day
i. Consider the standard output when the entire process is considered as a single process run by a
single resource.
Total Cycle time for standard output = Sum of cycle times for all sequential stations
= 38+34+35+22+18+20= 167 secs
Standard output = 8*60*60/167 ≈ 172 chairs per day.
Efficiency = 754/172 = 438%
ii. Consider the standard output when the entire process is run by a single resource sequentially.
Total Cycle time for standard output = Sum of cycle times for all sequential stations
= 38+34+35+32+30+34+22+18+20= 263 secs
Standard output = 8*60*60/263 ≈ 110 chairs per day.
Efficiency = 754/110 = 685%

c. What is the flow time of the process?

Since the seat and chair frame are produced in parallel, the flow time or throughput time is:
Sum of throughput times for A,B,C,X,Y,Z = 38+34+35+22+18+20= 167 secs
Operations Management ¦ ¦ Assignment 1 Page | 7 of 8

3. Ch 11 OQ 16 – Walley’s Widget Warehouse takes orders from 7 am to 7 pm. The manager wants to
analyze the process and has provided the process flow diagram shown below. There are 3 steps required
to ship a customer order. The first step is to take the order from a customer. The second step is to pick the
order for the customer, and then they have to pack the order ready for shipping. Wally promises that every
order placed today gets shipped tomorrow. That means that the picking and packing operations must
finish all orders before they go home.

100 Cus/hour 80 Cus/hour 60 Cus/hour

Wally wants to figure out the following

a. What is the current maximum output of the process assuming that no one works
overtime?
No. of available hours per day = 12 hours
Bottleneck process = Pack Orders
Capacity of Pack orders = 60 cus/hour
Maximum output of the process = 60 x 12 = 720 customer orders.

b. How long with the picking and packing operations have to work if we have a day where
the order taker works at his maximum capacity?
maximum capacity of order taking = 100 x 12 = 1200 orders for the day.
no. of hours for picking 1200 orders = 1200/80 = 15 hours
no. of hours for packing 1200 orders = 1200/60 = 20 hours

c. Given b, what is the maximum no. of orders waiting to be picked?

This is the maximum buffer between Take orders and Pick orders operations for the day.
Buffer capacity = Capacity of take orders – Capacity of Pick orders
= 100 – 80 = 20 orders/hour
Orders are taken for 12 hours.
Maximum orders waiting to be picked = 20 /hour x 12 hours = 240 orders
Operations Management ¦ ¦ Assignment 1 Page | 8 of 8

d. Given b, what is the maximum waiting to be packed?

This is the maximum buffer between Pick orders and Pack orders operations for the day.
Buffer capacity = Capacity of Pick orders – Capacity of pack orders
= 80 – 60 = 20 orders/hour

Orders are picked for 15 hours.

Maximum orders waiting to be packed = 20 /hour x 15 hours = 300 orders

e. If we double the packing capacity (from 60 to 120 orders per hour), what impact does this
have on your answers in parts b, c, and d.
maximum capacity of order taking = 100 x 12 = 1200 orders for the day.
no. of hours for picking 1200 orders = 1200/80 = 15 hours
new capacity for packing orders = 120 /hour x 12 = 1440 orders/day;
no. of hours for picking 1200 orders = 1200/ 120 = 10 hours
throughput of packing orders= 30 secs/order
Since the bottleneck has now shifted to Picking orders, packing process has to wait for orders to be
picked. Hence, no. of hours for packing 1200 orders would now be 15 hours and 30 secs (the last
order is picked at the end of 15th hour, hence we need an additional 30 seconds to pack the last
order)

There is no change to the maximum orders waiting to be picked, as the capacity of the input and
output processes have not changed.

There are no orders waiting to be packed, as the input rate for the packing process is slower than
its output rate.