Question: Consider the following simplified production process for an electronic device. Demand = 50,000 devices/Year Price = $50 each Raw Material = $5/device Employee Wage=$25/hr Number

Consider the following simplified production

Consider the following simplified production process for an electronic device. Demand = 50,000 devices/Year Price = $50 each Raw Material = $5/device Employee Wage=$25/hr Number of Employees = 5 (1/workstation) Each Employee Works 2,080 hrs/year (40 hrs/week, 52 weeks/year) Other Expenses = $1,500,000/Year Color of the device: Green Workstation Processing Time 1 7 minutes 2 10 minutes 3 4 minutes 4 5 minutes 5 1 minute An Engineer proposes buying a new fixture to reduce total processing time by 4 minutes. The new fixture, which will cost $1,000, would allow some work to be transferred from workstation 100 to 200. Assume 2 minutes of work will be transferred from 1 to 2 and processing time of 1 will go down to 5 minutes, processing time of 4 will go down to 3 minutes and processing time of 2 will go up to 12 minutes. Would you approve this change? Explain Why? State your assumptions and show your math

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