A novelty coffee mug manufacturer produces 5 different designs that are sold at tourist information kiosks. The demand requirements for the com- ing tourist season is as follows: 

The mugs can all be produced in the same workstations, but require different processing and setup times. The production information is in the following table: 

The company wants to produce all the required mugs in one four-week period. It currently operates workstations that work 8 hours per day, 5 days per week, with a capacity cushion of 20%. 

(a) Calculate the total time required to produce the mugs to meet the expected demand. 

(b) Calculate the time available (taking into account the capacity cushion) for 1 workstation. 

(c) How many workstations are needed to meet the production requirements? 

(d) The company only has 4 workstations available. If it only operates its 4 stations, how many weeks does it need to meet the production requirements? 

(e) Operating each workstation costs the company $25/hour for a total of $1,000 per week (including the capacity cushion). Calculate the total operating cost to produce the mugs. 

(f) Each workstation costs $2,500 to purchase and commission. If the com- pany acquires the extra number of workstations indicated in part (c), what would be the cost of production? 

(g) If the company has other contracts it needs to satisfy. Working on the mugs more than 4 weeks means it will have to cancel another contract, incurring a penalty of $4,500. What should the company do: cancel the contract or buy the required workstations?

Transcribed Image Text:

А В С A Design Demand (units) 500 750 600 800 450 D E А В С A Design Demand (units) 500 750 600 800 450 D E

Answer rating: 100% (QA)

Section a The total time necessary is 1575 5825 hours which is 740 hours section b Total time spent ... View the full answer