Larry's Wickets,Inc The Machines Operate on Two 8-Hour Shifts,5 Days Per Week,and

question 135

Essay

Larry's Wickets,Inc.is producing two types of products: A and B.Both are produced at the same machining operation.Because of demand uncertainties,the operations manager obtained three demand forecasts (pessimistic,expected,and optimistic).The demand forecasts,batch sizes (units/batch),processing times (hr/unit),and setup times (hr/batch)follow.
Time Standard Demand Forecasts (000 units/yr)
$$\begin{array} { | c | c | c | c | c | c | c | } \hline \text { Product } & \text { Processing } & \text { Setup } & \text { Batch Size } & \begin{array} { c } \text { Pessimisti } \\\mathrm { c }\end{array} & \text { Expected } & \text { Optimistic } \\\hline \text { A } & 30 & 1.0 & 200 & 100 & 120 & 150 \\\text { B } & .25 & 2.0 & 100 & 190 & 210 & 230 \\\hline\end{array}$$
The machines operate on two 8-hour shifts,5 days per week,and 50 weeks per year.The manager wants to maintain a 20 percent capacity cushion.
a.What is the minimum number of hours required of the machining equipment for the next year?
b.How many hours of capacity can the company expect from each machine?
c.What is the minimum number of machines needed (assuming no reliance on short-term options)?
d.What is the maximum number of machines needed (assuming no reliance on short-term options)?

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Definitions:

Average Total Cost

The total cost of production divided by the quantity of output produced, encompassing both fixed and variable costs.

Marginal Cost

The alteration in overall expenses that occurs when the production volume is increased by one unit.

Marginal Cost Curve

A curve that illustrates how the cost of producing an additional unit of a good changes as the output level is increased.

Fixed Costs

Costs that do not vary with the level of output or activity, such as rent, salaries, or loan payments.