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?

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?

Quizplus · Accepted Answer

The demand forecast shows that the demand for product B exceeds the production capacity of the company while the demand for product A is less than the capacity. Therefore, increasing the capacity cushion or decreasing it by 1 percent will not have a significant impact on meeting the demand for both products. On the other hand, increasing the batch size of product B to 300 units would increase the production quantity of product B per batch, which will help in meeting the demand requirements for product B. Therefore, increasing the batch size of product B to 300 units is the best choice for fully covering the demand next year.

The Southeast Manufacturing Company Is Producing Two Types of Products