3-Step Process with Rework

Consider the following three-step assembly operation with quality problems. All resources are staffed by one employee.

• The first resource has a processing time of 7 minutes per unit.
• The second resource has a processing time of 6 minutes per unit.
• The third resource has a processing time of 5 minutes per unit. With a 40% probability, the flow unit coming out of the third resource has to be reworked. In that case, the operations at the second and third resources are repeated. You can assume that (a) rework always succeeds (i.e. a unit going through the rework loop will always work after the third resource),and (b) the processing times for units in rework are the same as for regular units.

For every unit of demand, how many units have to flow through the second step in the process?

Tech Company is a medium-sized consumer electronics retailer. The company reported $155,000,000 in revenues for 2007 and $110,050,000 in Costs of Goods Sold (COGS). In the same year, Tech Co. held an average of $20,000,000 in inventory.

Inventory cost at Tech Co. is 35 percent per year. What is the per unit inventory cost (in dollars) for an MP3 player sold at $50? Assume that the margin corresponds to the retailers average margin.

Smooth Chin Device Company

The Smooth Chin Device Company is a manufacturer of high-end electric razors. These razors are produced using a machine-paced process. For each razor, a tray with components enters the process at the beginning of a conveyor belt. The tray then passes through the six steps (consisting of various tasks) explained in the table below. Workers perform the assembly operations on the moving tray. The last step consists of an inspection of the then fully assembled razor. The activity times of the process are as follows:

There are six workers, one at each of the six stations (A-F). They begin their workday at 8:00 a.m. and work steadily until 4:00 pm. (They are replaced with other workers for breaks and lunches, but the production is not slowed or stopped during these times.) Their hourly wage rate is $25 per hour. You can assume unlimited demand.

What is the average labor utilization (you can ignore any start-up or empty system effects)of the six workers? Please give your answer in decimal form (e.g. 0.5 for 50% utilization).

Strohrmann, a large-scale bakery in Pennsylvania, is laying out a new production process for their packaged bread, which they sell to several grocery chains. It takes 12 minutes to bake the bread.

How large an oven is required so that the company is able to produce 4,000 units of bread per hour (give your answer in terms of the number of units that can be baked simultaneously)?