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2. Suppose now that you are considering the architecture of the plant production floor. Your two objectives for the long term are to: Maximize the
2. Suppose now that you are considering the architecture of the plant production floor. Your two objectives for the long term are to: Maximize the rate, measured in terms of units produced per day, at which your factory can respond to customer orders. Minimize the risk, measured in terms of expected daily idle cost (hourly wages multiplied by expected number of idle hours per day), of idling parts of your factory. Your alternatives (and associated costs and benefits) are: i. Add second production line to handle orders requesting rapid response (for an expedition fee, of course). Production Rate: 200 units per day, Risk of daily plant idle: $5500 (due to new line workers) ii. Add inventory capacity to respond more quickly to custom orders. Production Rate: 125 units per day, Risk of daily plant idle: $2000 (due to extra inventory workers) iii. Add faster machinery to your current production line. Production Rate: 135 units per day, Risk of daily plant idle: $1750 iv. Provide 'repair' areas to your production floor to speed up rework of mistakes made on the main line. Production Rate: 110 units per day, Risk of daily plant idle: $1250 v. Do nothing: Production Rate
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