Question 1)

Capacity Calculation for Acme Industries

The operations manager at Acme Industries wants to ensure there is enough machines for production of their two most profitable products P23 and P61 for next year. Production runs for 1 shift per day, each shift is 8 hours long, and the factory is operational for 250 days a year.

The forecast for next year is 23,629 units for P23 and 38,000 units for P61.

The standard processing time (per unit) is 0.1 hours per unit for P23 and 0.08 hours per unit for P61.

The lot size is 100 for each product. Setup time for P23 is 2 hrs and for P61 is 1.5 hrs.

How many machines are needed, given that management wants a 15% capacity cushion? Enter your answer to 2 decimal places. Do not round your answer.

Question 2)

Manufacturing Equipment Scenario

Mike McQuick has to buy a new piece of equipment for his manufacturing unit that makes dashcams. He has two options:

• 1. US supplier has a version of the equipment with higher automation and hence lower labor requirements for using it. Fixed cost of using this US equipment is 30,000$ and the variable cost is 1$ per unit.
• 2. A European supplier has a version of the equipment with little automation, that is cheaper but requires more labor time to use it.Fixed cost of using this European equipment is only 10,000$ and the variable cost is 8$ per unit.

What is the break-even quantity? Enter your answer rounded to the nearest integer.

Manufacturing Equipment Scenario

If Mike plans to produce 6000 dashcams per year, should he go with the US supplier?

Yes

No