Mfg Metrics-3e-S 11-24, 24/06, 06/04/07
Chapter 3
MANUFACTURING METRICS
PROBLEMS
Production Concepts and Mathematical Models
Question 3.1 (10%)
A certain part is routed through 6 machines in a batch production plant. The setup time and
operation time for each operation or machine are given in the table below. The batch size is 100
and the average nonoperation time per machine is 12 hr. Determine (a) manufacturing lead time
and (b) production rate for operation 3 (machine 3). Suppose that the part is made in very large
quantities on a production line in which an automated work handling system is used to transfer
parts between machines. Transfer time between workstations is 15 s. The total time required to
set up the entire line is 150 hr. Assume that the operation times at the individual machines
remain the same. Determine (c) manufacturing lead time for a part after the production has
achieved steady state operation, (d) production rate for operation 3, and (e) theoretical production
rate for the entire production line.
Machine
Setup time (hr)
Operation time (min)
1
4
5
2
2
3.5
3
8
10
4
3
1.9
5
3
4.1
6
4
2.5
Solution:
Average T su = (4 + 2 + 8 + 3 + 3 + 4)/6 = 24/6 = 4 hr
Average T c = (5 + 3.5 + 10 + 1.9 + 4.1 + 2.5)/6 = 27/6 = 4.5 min
(a) MLT = 6(4 + 100(4.5/60) + 12) = 6(23.5) = 141 hr
(b) R p for operation 3: T p = [8 + 100(10/60)]/100 = 24.67/100 = 0.2467 hr/pc
R p = 4.05 pc/hr

 15
(c) MLT = 6 + 10  = 61.5 min

 60

 15
(d) T p for operation 3 =  + 10  = 10.25 min

 60
R p = 60/10.25 = 5.8536 pc/hr
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Mfg Metrics-3e-S 11-24, 24/06, 06/04/07
(e) Theoretical production rate for line = 5.8536 pc/hr since station 3 is the bottleneck station on
the line.
Question 3.2 (10%)
On an average, twenty new orders are started through a certain factory each month and an order
consists of 50 parts that are processed sequentially through 10 machines in the factory. The
operation time per machine for each part is 15 min. The nonoperation time per order at each
machine averages 8 hr, and the required setup time per order is 4 hr. There are 25 machines in total
in the factory working in parallel. Each of the machines can be set up for any type of job processed
in the plant. Only 80% of the machines are operational at any time (the other 20% are in repair or
maintenance). The plant operates 160 hr/month. However, the plant manager complains that a total
of 10 overtime machine-hours must be authorized each month in order to keep up with the
production schedule. (a) What is the manufacturing lead time for an average order? (b) What is the
plant capacity (on a monthly basis) and why must the overtime be authorized? (c) What is the
utilization of the plant? (d) Determine the average level of work-in-process (number of
parts-in-process) in the plant.
Solution:
15


(a) MLT = 10 4 + 50 ×
+ 8  = 245 hr/order
60


15 

 4 + 50 × 
60 
(b) T p = 
= 0.33 hr/pc
50
R p = 1/0.33 = 3.0303 pc/hr
PC = (25 × 0.8)(160)(3.0303)/10 = 969.7 pc/month
Parts launched per month = 20 × 50 = 1000 pc/month
Schedule exceeds plant capacity by 1000 - 969.7 = 30.3 pc
This requires overtime in the amount = (30.303 pc)/(3.0303 pc/hr)
= 10 hr
(c) Utilization U = (1000 pc)/(969.7 pc) = 1.03125 = 103.125%
(d) WIP = (245 hr)(969.7 pc/month)(1.03125)/(160 hr/month) = 1531.25 parts
Question 3.3 (10%)
One million units of a certain product are to be manufactured annually on dedicated production
machines that run 24 hr/day, 5 day/week, 50 week/year. (a) If the cycle time of a machine to
produce one part is 1 min, how many of the dedicated machines will be required to keep up with
demand? assuming that availability, utilization, worker efficiency are 100%, and no setup time
will be lost. (b) How many of the dedicated machines will be required to keep up with demand?
assuming that availability is 0.90, utilization and worker efficiency are 100%, and no setup time
will be lost.
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Mfg Metrics-3e-S 11-24, 24/06, 06/04/07
Solution:
(a) Total workload WL = 106 (1 min/60) = 16666.7 hr/yr
Hours available/machine = 24 × 5 × 50 = 6000 hr/yr per machine
Number of machines n =
(b) At A = 90%, n =
16666.7
= 2.78 → 3 machines
6000
16666.7
= 3.09 → 4 machines
6000 × 0.9
Question 3.4 (10%)
A certain job shop specializes in one-of-a-kind orders dealing with parts of medium-to-high
complexity. A typical part is processed sequentially through ten machines in batch size of one. The
shop contains a total of 8 conventional machine tools and operates 35 hr/week of production time.
The machine tools are interchangeable in the sense that they can be set up for any operation
required on any of the parts. Average machining time is 0.5 hr, work handling time is 0.3 hr, tool
change time is 0.2 hr, setup time is 6 hr, and nonoperation time is 12 hr. A new programmable
machine has been purchased by the shop that is capable of performing all ten operations in a single
setup. The programming of the machine for this part will require 20 hr; however, the programming
can be done off-line, without tying up the machine. The setup time will be 10 hr. The total
machining time will be reduced to 80% of its previous value due to advanced tool control
algorithms; the work handling time will be the same as for one machine; and the total tool change
time will be reduced by 50% because it will be accomplished automatically under program control.
For the one machine, nonoperation time is 12 hr. (a) Determine the manufacturing lead time for the
traditional method and for the new method. (b) Compute the plant capacity for the following
alternatives: (1) a job shop containing the 8 traditional machines, and (2) a job shop containing 2 of
the new programmable machines. (c) Determine the average level of work-in-process for the two
alternatives, if the alternative shops operate at full capacity.
Solution:
(a) Present method: MLT = 10(6 + 0.5 + 0.3 + 0.2 + 12) = 190 hr
New method: MLT = 1(10 + 10 × 0.5 × 0.8 + 0.3 + 10 × 0.2 × 0.5 + 12) = 27.3 hr
(b) Present method:
For one machine, T c = (6 + 0.5 + 0.3 + 0.2)/1 = 7 hr
R c = 1/7 = 0.1429 pc/hr
For 8 machines, plant capacity
PC = (8 machines)(35 hr)(0.1429 pc/hr)/(10 op/pc) = 4 order/week
New method:
For each machine, T c = (10 + 5.3)/1 = 15.3 hr
R c = 1/15.3 = 0.06536 pc/hr
For two machines, plant capacity
PC = (2 machines)(35 hr)(0.06536 pc/hr)/(1 op/pc) = 4.575 order/week
(c) Present method: WIP = (4 order/week)(190 hr/order)/(35 hr/wk) = 21.7 orders
New method: WIP = (4.575 order/week)(27.3 hr/order)/(35 hr/wk) = 3.57 orders
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Mfg Metrics-3e-S 11-24, 24/06, 06/04/07
Costs of Manufacturing Operations
Question 3.5 (10%)
A certain production plant has annual fixed costs FC = $2000000. Variable cost VC per unit is
functionally related to annual output Q as VC = $12 + $0.005Q. Total annual cost is given by the
equation TC = FC + VC × Q. The unit sale price for one production unit P = $250. (a) Determine
the value of Q that minimizes unit cost UC, where UC = TC/Q; and compute the annual profit
earned by the plant at this quantity. (b) Determine the value of Q that maximizes the annual profit
earned by the plant; and compute the annual profit earned by the plant at this quantity.
Solution:
(a) TC = 2 × 106 + (12 + 0.005Q)Q = 2 × 106 + 12 Q + 0.005 Q2
UC =
TC
2 × 10 6
=
+ 12 + 0.005Q
Q
Q
d (UC )
dQ
− 2 × 10 6
=
+ 0.005 = 0
Q2
Q = 20 × 103 = 20000 pc
Profit Π = 250 Q - (2 × 106 + 12 Q + 0.005 Q2)
= 250(20000) - (2 × 106 + 12(20000) + 0.005(20000)2) = $760000/yr
(b) Profit Π = 250 Q - (2 × 106 + 12 Q + 0.005 Q2) = 238 Q - 2 × 106 - 0.005 Q2
dΠ
= 238 – 2(0.005Q) = 238 - 0.010 Q = 0
dQ
Q = 23800 pc
Profit = 250(23800) - (2 × 106 + 12(23800) + 0.005(23800)2) = $832200/yr
Question 3.6 (10%)
Costs have been compiled for a certain manufacturing company for the most recent year. The
summary is shown in the table below. The company operates two different manufacturing plants,
plus a corporate headquarters. Determine (a) the factory overhead rate for each plant, and (b) the
corporate overhead rate. The firm will use these rates in the following year.
Expense category Plant 1
Plant 2
Corporate headquarters
Direct labor
$1000000
$1750000
Materials
$3500000
$4000000
Factory expense
$1300000
$2300000
Corporate
expense
$5000000
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Mfg Metrics-3e-S 11-24, 24/06, 06/04/07
Solution:
1300000
= 1.30 = 130%
1000000
2300000
= 1.3143 = 131.43%
Plant 2: Factory overhead rate FOHR 2 =
1750000
5000000
(b) Corporate overhead rate COHR =
= 1.8182 = 181.82%
1000000 + 1750000
(a) Plant 1: Factory overhead rate FOHR 1 =
Question 3.7 (10%)
In the operation of a certain production machine, one worker is required at a direct labor rate of
$10/hr. Applicable labor factory overhead rate is 50%. Capital investment in the system is $250000,
expected service life is 10 years, no salvage value at the end of that period, and the applicable
machine factory overhead rate is 30%. The work cell will operate 2000 hr/yr. Use a rate of return of
25% to determine the appropriate hourly rate for this work cell.
Solution:
(A/P,25%,10) =
0.25(1 + 0.25)10
= 0.2801
(1 + 0.25)10 − 1
UAC = 250000(0.2801) = 70025/year
Machine rate C m = 70025/2000 = $35.01
C o = 10(1 + 0.50) + 35.01(1 + 0.3) = $60.52/hr
Question 3.8 (10%)
The break-even point is to be determined for two production methods, one a manual method and
the other automated. The manual method requires two workers at $9/hr each. Together, they
produce at a rate of 36 unit/hr. The automated method has an initial cost of $125000, a 4-year
service life, no salvage value, and annual maintenance costs are $3000. No labor (except for
maintenance) is required to operate the machine, but the power required to run the machine is
estimated to be 50 kW/hr (when running). Cost of electric power is $0.05/kWh. If the production
rate for the automated machine is 100 unit/hr, determine the break-even point for the two methods,
using a rate of return 25%.
Solution:
Manual method: variable cost = (2 workers)($9/hr)/(36 pc/hr) = $0.5/pc
Total cost as a function of Q is TC = 0.5Q assuming no fixed costs.
0.25(1 + 0.25) 4
= 0.4234
Automated method: (A/P,25%,4) =
(1 + 0.25) 4 − 1
UAC = 125000(A/P,25%,4) + 3000 = 125000(0.4234) + 3000 = $55930/yr
Variable cost =
(50kwh / hr )($0.05 / kwh)
= 0.025/pc
100pc / hr
Total cost as a function of Q = 55930 + 0.025Q
Break-even point: 0.5Q = 55930 + 0.025Q
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Mfg Metrics-3e-S 11-24, 24/06, 06/04/07
Q = 117747 pc/yr
Hours of operation per year: Manual: H =
117747
= 3270.76 hr/yr
36
Comment: This would require two shifts.
117747
Automated: H =
= 1177.47 hr/yr
100
Comment: Plenty of additional capacity in one shift beyond the break-even point.
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