VIETNAM NATIONAL UNIVERSITY – HO CHI MINH CITY- INTERNATIONAL

UNIVERSITY
PRODUCTION AND OPERATION MANAGEMENT - Lecturer: Truong Quang Duoc

Class: Tuesday afternoon

Group 7:
Lê Thu Trang – BABAWE18670 Trương Trần Diệu Linh – BABAWE18702

Lý Phương Thanh – BABAIU18187 Nguyễn Hoàng Quyên – BABAWE18660

Nguyễn Quang Hiếu – BABAWE17349 Lê Minh Thi – BABAWE18453

Nguyễn Hoàng Bảo Trân – BTARIU17025 Huỳnh Minh Trâm – BTARIU17003

Nguyễn Thị Thủy - BABAWE18293 Thái Hoàng Nguyễn – BTFTIU17051

Homework 6
Chapter 7s: Capacity Planning
S7.1 Southeastern Oklahoma State University’s business program has the facilities and faculty
to handle an enrollment of 2,000 new students per semester. However, in an effort to limit
class sizes to a “reasonable” level (under 200, generally), Southeastern’s dean, Holly Lutze,
placed a ceiling on enrollment of 1,500 new students. Although there was ample demand for
business courses last semester, conflicting schedules allowed only 1,450 new students to take
business courses. What are the utilization and efficiency of this system?

We have:
- Design capacity = 2,000 students
- Effective capacity = 1,500 students
- Actual output = 1,450 students
Actual output
The utilization for this system is Utilization=
Design capacity
¿ 1,450
= 72.5 %
2,000
Actual output
The efficiency for this system is: Efficiency=
Effective capacity
1,450
= = 96.7 %
1,500
Hence, the utilization for this system is 72.5% while the efficiency for the system is 96.7%
S7.5 Material delays have routinely limited production of household sinks to 400 units per
day. If the plant efficiency is 80%, what is the effective capacity?
Actual output
We have the equation: Efficiency=
Effective capacity
Actual output 400
è Efficiency capacity = = 500 units
Effective 0.8

Hence, the effective capacity for the plant is 500 units

S7.11 The three-station work cell illustrated in Figure S7.7 has a product that must go through
one of the two machines at station 1 (they are parallel) before proceeding to station 2.

a) What is the bottleneck time of the system?

60 minutes
_The time for station 1: = 3 minutes per unit
20units +20 units
60 minutes
_The time for station 2: = 12 minutes per unit
5 unit s
60 minutes
_The time for station 3: = 5 minutes per unit
12 units
The bottleneck time is the time of the slowest workstation which is station 2 with 12 minutes.
b) What is the bottleneck station of this work cell?
The bottleneck station of this work cell is Station 2.
c) What is the throughput time?
System throughput time is 3+12+5= 20 minutes.
d) If the firm operates 10 hours per day, 5 days per week, what is the weekly capacity of this
work cell?
If the firm operates 10 hours per day, 5 days per week, the weekly capacity of this work cell is:
10× 5× 60
è Weekly capacity = = 250 units per week.
12
Hence the system throughput time is 20 minutes and the weekly capacity is 250 units per
week.
S7.12 The three-station work cell at Pullman Mfg., Inc. is illustrated in Figure S7.8. It has two
machines at station 1 in parallel (i.e., the product needs to go through only one of the two
machines before proceeding to station 2).

a) What is the throughput time of this work cell?

Throughput time = 20+12+8 = 40 minutes
b) What is the bottleneck time of this work cell?
c) What is the bottleneck station?
20 mins
Process time for Station 1 = = 10 mins/unit
2machines
The bottleneck time for this work cell is the longest workstation, which is Station 2 = 12
min/unit
Hence, the bottleneck time of this work cell is 12 minutes, and the bottleneck station is
station B
d) If the firm operates 8 hours per day, 6 days per week, what is the weekly capacity of this
work cell?
If the firm operates 10 hours per day, 5 days per week, the weekly capacity of this work cell is:
60× 8 ×6
è Weekly capacity = = 240 units/week
12
Hence, the weekly capacity of this work cell is 240 units/week
S7.15 Smithson Cutting is opening a new line of scissors for supermarket distribution. It
estimates its fixed cost to be $500.00 and its variable cost to be $0.50 per unit. The selling
price is expected to average $0.75 per unit.
Fixed cost (F) = $500
Variable cost (V) = $0.5
Price (P) = $0.75
a) What is Smithson’s break-even point in units?
F
We have the equation Break−even∈units=
P−V
500
è The break-even point in units of Smithson Cutting = = 2,000 units
0.75−0.5
b) What is the break-even point in dollars?
F
: Break−even point∈dollars=
We have the equation V
1−
P
500
è The break-even point in dollars of Smithson Cutting = 1− 0.5 = $1,500
0.75
S7.17 Markland Manufacturing intends to increase capacity by overcoming a bottleneck
operation by adding new equipment. Two vendors have presented proposals. The fixed costs
for proposal A are $50,000, and for proposal B, $70,000. The variable cost for A is $12.00, and
for B, $10.00. The revenue generated by each unit is $20.00.
F
We have the equation: Break−even∈units=
P−V
a) What is the break-even point in units for proposal A?
Fixed cost (F) = $ 50,000
Variable cost (V) = $12
Price (P) = $20
50,000
è The break-even point in units for proposal A = = 6,250 units
20−12
b) What is the break-even point in units for proposal B?
Fixed cost (F) = $ 70,000
Variable cost (V) = $10
Price (P) = $20
70,000
èThe break-even point in units for proposal B = = 7,000 units
20−10
Hence, the break-even point in units for proposal A and B respectively is 6,250 units and
7,000 units
S7.20 Janelle Heinke, the owner of Ha’Peppas!, is considering a new oven in which to bake
the firm’s signature dish, vegetarian pizza. Oven type A can handle 20 pizzas an hour. The
fixed costs associated with oven A are $20,000 and the variable costs are $2.00 per pizza.
Oven B is larger and can handle 40 pizzas an hour. The fixed costs associated with oven B are
$30,000 and the variable costs are $1.25 per pizza. The pizzas sell for $14 each.
a) What is the break-even point for each oven?
Oven A: 20 pizzas/ hour Oven B: 40 pizzas/hour
Fixed cost (F) = $ 20,000 Fixed cost (F) = $30,000
Variable cost (V) = $2 Variable cost (V) = $1.25
Price (P) = $14 Price (P) = $14
F
We have the equation Break−even∈units=
P−V
20,000
è The break-even point in units for oven A = = 1666.67 units
14−2
30,000
è The break-even point in units for oven B = = 2352.94 unit
14−1.25
b) If the owner expects to sell 9,000 pizzas, which oven should she purchase?
We have the equation: Profit = ( P−V ) x−F
è Profit of oven A = ( 14−2 ) ×9,000−20,000 = $88,000
è Profit of oven B = ( 14−1.25 ) ×9,000−30,000 = $84,750
Hence, if the owner expects to sell 9,000 pizzas, she should purchase oven A for a higher
profit
c) If the owner expects to sell 12,000 pizzas, which oven should she purchase?
We have the equation: Profit = ( P−V ) x−F
è Profit of oven A = ( 14−2 ) ×12,000−20,000 = $124,000
è Profit of oven B = ( 14−1.25 ) ×12,000−30,000 = $123,000
Hence, if the owner expects to sell 12,000 pizzas, she should purchase oven A for a higher
profit
d) At what volume should Janelle switch ovens?
Difference ∈¿ cost 30,000−20,000
Indifference point= = =13,333.33
Difference∈variable cost 2−1.25
Hence, at the volume of 13,333.33, Janelle should switch to oven B