The accompanying diagram depicts a five-step, worker-paced headphone manufacturing plant. The headphones are meant to be used with iPods and DVD players. Step 1 involves a worker bending a metal strip into an arc shape. In step 2, the metal arc is fitted with a plastic sleeve. In step 3, the headphones are fitted at the end of the metal and plastic strips. In step 4, the wires are soldered into the headphones. Step 5 involves a specially designed packaging unit. After the plant has been operational for a couple of hours, the manager inspects the plant. He is particularly interested in cutting labor costs. He observes the following. The process is capacity constrained and the entire process produces 36 units in one hour. U1 through U5 denote the utilization at steps 1 through 5 respectively. Currently, there is a single worker at each step and the utilizations are as follows:

U1 4/30, U2 4/15, U3 4/5, U4 1, U5 2/5.

Answer the following questions based on the given data and information.

a. What is the capacity of step 5?

b. Which step is the bottleneck?

c. Which process step has the highest capacity?

d. If the wage rate is $36 per hour per person, what is the direct labor cost per unit?

Transcribed Image Text:

Process Process Process Process Process Step Z U2 U3 U4 U5 Ul