BE1401 Business Operations and Processes

Answer Key for Exercises on Process Setups

1. Auto Parts Manufacturing

a) Assuming an ongoing process or assuming negligible startup losses in the long run,
we can use the capacity formula for batch processes as follows. Current batch size is
B = 1000 sets, setup time is S = 4h + 4h = 8h, and unit processing time is p = 0.01h +
0.01h = 0.02h per unit.

C = B / (S + B x p) = 1000 / (8h + 1000 x 0.02h) x 7h/day = 250 sets per day

b) The new flow rate (FR) would be 1.1 x 250 = 275 sets per day or 39.28 per hour. We
can work backwards and find the batch size B that gives capacity C = 275 sets per
day or use the following formula.

Recommended batch size = (FR x S) / (1 – FR x p) = (39.28 x 8) / (1 – 39.28 x 0.02) =

1466 sets.

c) Some alternative actions are: reduce setup time, reduce processing time, hire
another machinist.

2. Setups Everywhere

(a) Capacity (Step 1) = B / S + Tb = 35 parts / (30 minutes + (0.25*35) minutes) =

.903 units/minute = 54.19 units/hour

Capacity (Step 2) = B / S + Tb = 35 parts / (20 minutes + (0.20*35) minutes) =

1.296 units/minute = 77.78 units/hour

Capacity (Step 3) = B / S + Tb = 35 parts / (32 minutes + (0.15*35) minutes) =

.940 units/minute = 56.37 units/hour

Process Capacity is defined by the bottleneck i.e. Step 1 = 54.19 units per hour

(b) Step 2 is never the bottleneck because its activity time, 20 + 0.20B, is always less
than Step 1’s activity time, 30 + 0.25B, for any positive value of B. So the task can
be simplified to determining for what values Steps 1 and 3 are the bottleneck. The
activity time for the two steps are equal when 30+0.25B = 32+0.15B, or when B=20.
For batches smaller than 20 parts, Step 3 is the bottleneck. For batches larger than
20 parts, Step 1 is the bottleneck.
3. Metal Box Production

(a) For a batch size of 300, stamping requires 800 minutes per batch, painting
requires 320 minutes, drying requires 120 minutes, and assembly requires 600
minutes. Hence, throughput time is the sum of these durations, which is 1,840
minutes per batch of 300. The bottleneck is stamping and cycle time is 800
minutes. Given 400 minutes in a day, capacity per day is 300sets / 800min x
400min/day = 150 sets per day. In addition, WIP = FR x FT = capacity x throughput
time = 150 sets/day x 1,840min x 1day/400 min = 690 sets.

(b) When batch size doubles to 600, we can do a similar analysis. Stamping requires
1,400 minutes per batch, painting requires 620 minutes, drying still requires 120
minutes, and assembly requires 1,200 minutes. Throughput time is 3,340 minutes
per batch. Bottleneck remains at stamping and cycle time is 1,400 minutes.
Capacity increases to 171.43 sets per day. However, WIP shoots up to 1,431.43 sets.

(c) Batch size remains at 300 sets but setup time at stamping is reduced from 100
minutes to 20 minutes. This time, stamping would require 640 minutes per batch,
painting would require 320 minutes, drying would still require 120 minutes, and
assembly would require 600 minutes. Throughput time would be 1,680 minutes.
The bottleneck would still be stamping and cycle time becomes 640 minutes.
Capacity improves to 187.5 sets per day while WIP is held at only 787.5 sets.