The Southeast Manufacturing Company is producing two types of products: A and B. Demand forecasts for next year and other production-related information are provided in the following table:
Both of these products are produced at the same workstation, called the Automatic Lathe. Currently, the company has 12 automatic lathes, and financial constraints prevent any expansion for the next year. It works 250 days per year with two 8-hour shifts and desires a 25 percent capacity cushion. Which one of the following alternatives will allow next year's demand to be fully covered?
A) Do nothing.
B) Increase the capacity cushion to 30 percent.
C) Increase the batch size of product B to 300 units.
D) Decrease the capacity cushion by 1 percent.

Question

The Southeast Manufacturing Company is producing two types of products: A and B. Demand forecasts for next year and other production-related information are provided in the following table: 
Both of these products are produced at the same workstation, called the Automatic Lathe. Currently, the company has 12 automatic lathes, and financial constraints prevent any expansion for the next year. It works 250 days per year with two 8-hour shifts and desires a 25 percent capacity cushion. Which one of the following alternatives will allow next year's demand to be fully covered?
A) Do nothing. 
B) Increase the capacity cushion to 30 percent. 
C) Increase the batch size of product B to 300 units. 
D) Decrease the capacity cushion by 1 percent.

Quizplus · Accepted Answer

Based on the demand forecast provided in the table, producing the current batch size will not be enough to cover the demand for both products. Additionally, financial constraints prevent the company from acquiring more automatic lathes. Therefore, the best alternative would be to increase the batch size of product B to 300 units, which will allow the company to fully cover the demand for both types of products. Increasing the capacity cushion would not increase production capacity, while reducing it could result in production shortages.

The Southeast Manufacturing Company Is Producing Two Types of Products