The Northern 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 Northern 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

The demand for product B is 20% more than its capacity, while the demand for product A is less than its capacity. Therefore, by increasing the batch size of product B to 300 units, the company can meet the demand for both products without increasing the capacity cushion or decreasing it, making option C the best choice.

The Northern Manufacturing Company Is Producing Two Types of Products