Ruttles Circuit Company manufactures circuit boards for other firms. Management is attempting to search for ways to reduce manufacturing labor costs and has received a proposal from a consulting company to rearrange the production floor next year. Using the information below regarding current operations and the new proposal, which of the following decisions should management accept?
A)Do not change the production floor.
B)Rearrange the production floor.
C)Either, because it makes no difference to the employees.
D)It doesn't matter because the costs incurred will remain the same.

Question

Ruttles Circuit Company manufactures circuit boards for other firms. Management is attempting to search for ways to reduce manufacturing labor costs and has received a proposal from a consulting company to rearrange the production floor next year. Using the information below regarding current operations and the new proposal, which of the following decisions should management accept? 
A)Do not change the production floor. 
B)Rearrange the production floor. 
C)Either, because it makes no difference to the employees. 
D)It doesn't matter because the costs incurred will remain the same.

Quizplus · Accepted Answer

The proposal to rearrange the production floor may lead to a reduction in manufacturing labor costs. The current production process has a cycle time of 12 minutes and an output of 300 circuit boards per hour. The proposed floor plan reduces cycle time to 10 minutes per cycle and has an hourly production rate of 360 circuit boards. This represents a 20% increase in production rate, which may reduce labor costs. Therefore, management should accept the proposal to rearrange the production floor.

Ruttles Circuit Company Manufactures Circuit Boards for Other Firms