A manufacturing company must implement a new manufacturing process to produce a new

vacuum cleaner. Two processes have been identified that produce the same vacuum cleaner. The

cost data from the two processes is as follows:

Process

Fixed Cost per

year

Variable Cost per

unit

A $$500,000$ $$50$

B $$350,000$ $$60$

The revenue that will be generated from the sales of each vacuum cleaner produced by is $$130$

per unit.

a$.$ Determine each process$$ break$-$even point.

b$.$ For what volume range is each process superior?

c$.$ If the expected annual demand for the product is $5,000$ units, which process is best?

d$.$ If the expected annual demand for the product is $18,000$ units, which process is best?

Problem$4$

The following diagram shows a production system with $5$ workstations as shown in the diagram below

along with their capacities, the number of units each can produce per hour. Station A has two machines

working in parallel. That is$,$ before proceeding to station B$,$ the product can be processed in either one of

the two machines in Station A$.$ sequence

a$.$ Determine the capacity $($in units per hour$)$ of the five workstations.

b$.$ Which workstation among the four is the bottleneck?

c$.$ If the production system operates $8$ hours per day, what is its daily capacity?

d$.$ If you could increase the capacity of any of the five workstations, which one would you focus on$?$ By

how much would you increase the capacity $($or decrease the processing time per unit$)$ of this

workstation? What would be the daily capacity of the entire system after these improvements were

made?

Station A

$18$ min$/$unit Station B

$16$ min$/$unit

Station C

$30$ min$/$unit

Station D

$20$ min$/$unit

Station E

$25$ min$/$unit

Station A

$18$ min$/$unit