ANSWER PARTS A, B , C and D WITH STEPS INCLUDED IN ANSWERS.

QUESTION 1 (30 POINTS) Consider the following simple assembly process: v A B Raw Material 6 min/unit 12 min/unit 5 min/unit Finished Goods The numbers below each step refer to the time necessary to process one unit of the product at that step. The process is staffed by three operators with one operator assigned to each of the three steps. Assume no set-up is required, processing times are constant and no Work in Process (WIP) is permitted beyond that actually being worked on at each process step (i.e., there is no buffer between process steps). (a) [5 Points] What is the Capacity of the process? (b) [5 Points] Find the Capacity Utilization of operator C. Compare it with the Capacity Utilization of operator A. (c) [8 Points] Each operator receives regular wages of $33/hour for the first 8 hours, and overtime wages of $40/hour for any additional time. Twelve hours per day is the maximum work time permitted. A finished unit sells for $45 while its direct material cost is $20/unit. Does it pay to use overtime under this cost structure (assuming sufficient demand exists)? (d) [7 Points] Would you hire a skilled operator whose wage rate is $40/hour (regular time), but could perform Step B at a time of 10 minutes/unit? (e) [5 Points] Same as (d), except that the operator performs Step A at a processing time of 1 minutes/unit