Individual Assignment # 2 (Production Planning, Capacity & Bottleneck Analysis)

(You may use Excel for your own work, but please submit your answer in PDF or Word format)

Purpose:

This assignment is designed to reflect upon several related concepts of Operations Management, such as Production Planning, Bottleneck Management, Capacity and Demand Management, and Sensitivity (What-If) Analysis. This is also a good lead-off to the book, The Goal. You do not need to use Solver in this assignment (though you can).

Task:

You manage the production process in the high-tech facility of Dale Computers Inc. The facility consists of three different assembly lines (1, 2, 3) making two different products, X and Y. Assembly Line 2 is dedicated to the assembly of product X, and assembly line 3 is dedicated to product Y. Assembly Line 1 can assemble both the products. The production process begins with the procurement of raw materials from suppliers. Next, the raw materials are processed into six independent subassemblies, A-F, in separate work areas within the facility. Each product is then assembled from these subassemblies in one of the assembly lines. Product X involves the assembly of subassemblies A, B, C, and E. Product Y requires that subassemblies B, C, D, E, and F be assembled. Subsequent to assembly, each product is finished, customized (painted and other options added), packaged and shipped. Current trends indicate that 20% of product X and 50% of product Y are customized.

Following are the capacities of the work areas producing the subassemblies:

Subassembly Type	Capacity (Units/Week)
A	2450
B	2280
C	2400
D	2450
E	3500
F	1200

The annual demands for the products are as shown below:

Product	Sub-assemblies required for one unit of product	Annual Unit Sales
X	(2 of A); (1 of B, C, E)	52,000
Y	(1 of B, C, F); (2 of D, E)	52,000

The capacities of the assembly lines and the finishing, packaging and customizing areas are as given below:

Assembly line 1 1200 units/week Finishing 2500 units/week

Assembly line 2 500 units/week Customizing 850 units/week

Assembly line 3 600 units/week Packaging 3000 units/week

Notes: (1) Assume 52 operating weeks/year. Converting to weekly demand may be helpful.

(2) Plan production to just meet the demand (do not overproduce).

Answer the following questions Show your calculations.

1. From the point of view of capacity management, what is the key business issue for Dale Computers, given that demand forecast is available? [Note: Answer this in concept, before you do Part 2 below] (10%)
2. With the current weekly demands of 1000 for each product X and Y, what is the current bottleneck resource? Show your calculations. [Note: Don't change demand yet] (50%)
3. Management must deal with changing demand and resource constraint, by analyzing alternative business scenarios. If the weekly demand for X and Y increased proportionately (= by same percentage), identify the top three resources that are bottleneck candidates. Show your calculations. [Note: Take Assembly Lines together as a single resource] (20%)
4. Now, if demands for X and Y change disproportionately (= by different percentage) in the above situation, what does your analysis tell you about its effect on bottleneck shift, especially in product mix situation of a multiple product plant? Defend your answer with necessary "what-if" examples. [Note: this part will assess your critical thinking] (20%)