DECISION PROBLEM $2$: Capacity Planning to meet Uncertain Demand

Demand uncertainties are the root of all capacity planning challenges. Excess capacity results in waste if equipment, invMeetentory, or personnel are idle. Insufficient capacity results in the loss of business and the potential loss of sales to competitors who can meet customer demand., :would be needed $,$

Olde World produces three different types of window frame profiles $$ the Abbot, the Berkeley, and the Cheshire. It is known that one specific machining center is the production bottleneck for all three frames. Olde World's production facility operates five days a week and has three $8-$hour shifts. The facility is open for $50$ weeks a year.

Below are the time standards, lot sizes and demand forecasts for the Abbot, the Berkeley, and the Cheshire. Since there is always some uncertainty in demand, the fabrication manager considers three different forecasts ranging from pessimistic to expected to optimistic. The manager has determined that a $20\%$ capacity cushion is optimal.

Assignment $1,$ answer the following questions:

How many machines are needed at the bottleneck machining center for each of the three demand forecast scenarios?

If the lot sizes were increased by $50\%$; how many machines at the bottleneck machining center would be needed for each demand forecast scenario?

Assume lot sizes were not increased. If Olde World has two machines but can find a way to reduce setup time by $90\%$ through process improvements, would they have adequate capacity to meet demand in all three scenarios without any increase in lot sizes?

Explain which considerations are most critical in developing capacity plans to optimize