Quiz 4: Estimating and Reducing Labor Costs

Business

The throughput rate of a set of resources will depend on the capacity of the bottleneck resource. A bottleneck is the resource having the minimum capacity. The capacity of a resource is computed by the following expression: img a. Compute the capacity of each of the resources by using the following Excel computations. img Results img Note that the resource 2, having the lowest capacity, is the bottleneck resource. The flow rate will be equal to the capacity of the bottleneck resource i.e. 0.1667 units per minute. Compute the total time to produce 100 units starting with an empty system as follows: img So, the total time to complete 100 units is img b. Compute the average labour content by summing up the processing times at the three resources. So, img The average labour content is img c. Compute the average labour utilization using the following formula: img Compute the idle time of the workers by subtracting the processing time from the product of the system cycle time and the number of workers. So, The idle time of the workers at resource-1 img The idle time of the workers at resource-2 img The idle time of the workers at resource-3 img So, the total idle time img img Therefore, the average labour utilization is img d. Compute the cost of direct labour using the following formula given the wage rate being $10 per worker-hour. img The cost of direct labour is, therefore, img

The throughput rate of a set of resources will depend on the capacity of the bottleneck resource. A bottleneck is the resource having the minimum capacity. The capacity of a resource is computed by the following expression: img a. Compute the capacity of each of the resources by using the following Excel setup and computations. img Results img Note that the worker-3, having the lowest capacity, is the bottleneck resource. The capacity of the line will be equal to the capacity of the bottleneck resource i.e. 0.0133 units per second. So, the capacity img b. Use the following assignments of tasks in order to get the maximum possible capacity given the two constraints. Worker-1: Task 1, 2 Worker-2: Task 3 Worker-3: Task 4 Worker-4: Task 5, 6 Compute the capacity of each of the resources by using the following Excel setup and computations. img Results img Note that the worker-1, having the lowest capacity, is the bottleneck resource. The capacity of the line will be equal to the capacity of the bottleneck resource i.e. 0.0182 units per second. So, the capacity img c. Note that there are 4 workers and 6 tasks. So, at least two combinations of tasks must be carried out to accommodate all the tasks. And none of the combinations will give rise to worker-wise processing time less than 55 minutes for the bottleneck. So, it is practically impossible to increase the capacity more than that found in part-b. So, the capacity even after rearrangement is img

The throughput rate of a set of resources will depend on the capacity of the bottleneck resource. A bottleneck is the resource having the minimum capacity. The capacity of a resource is computed by the following expression: img a. Compute the capacity of each of the resources by using the following Excel setup and computations. img Results img Note that the worker working at img , having the lowest capacity, is the bottleneck resource. b. The capacity of the line will be equal to the capacity of the bottleneck resource i.e. 0.011 units per second. So, img The capacity is img . c. Given an unconstrained demand rate, the flow rate will be same as the capacity of the line i.e. 40 per hour. Compute the cost of direct labour using the following formula given the wage rate being $15 per worker-hour. The cost of direct labour is, therefore, img The cost of direct labour is, therefore, img d. If a single worker performs all the tasks, then one unit will be produced in a time which is equal to the total of the processing time of all the 9 stations. img So, flow rate will be 1 unit in 665 seconds i.e. img img The cost of direct labour is, therefore, img e. Compute the utilization of a resource using the following formula: img So, img So, the utilization of workeR2 is img f. There are 6 workers and 9 stations. So, at least 3 pairs of workstations must be combined. The combination pairs are as follows: img The pairs which give the least processing times in ascending order are 5+6, 7+8, and 3+4. So, the optimal assignments will be as follows: img g. Compute the capacity by using the following Excel setup and computations. img Results img Note that the worker working at station 3, having the lowest capacity, is the bottleneck resource. The capacity is 0.00645 units per second or, img