Activity Time:

Setup Time:

1 min / part 20 min / batch

3 min / part 0 min / batch

1.5 min/part 10 min / batch

Hireoven provides industrial oven services that dries coated battery grids. Longcharge

plans to use one of Hireoven's processes to dry their grids. They believe that the process called "ABC drying" is the best option. A simple flow of this process is given above. There is no buffer between the steps of this process. The operator of a step also handles the setup in that step. The setup of two parallel ovens can be done in parallel. The processing time per part and setup time per batch required for each step is given below that step. Hireoven can provide a parallel oven for each step separately. Accordingly, Longcharge can use at most two ovens at each workstation. Hireoven also provides two different batch size options 8 and 20. Exclude the start-up time in your calculations.

i) What is the capacity of the given process for batch sizes of 8 and 20? And identify the bottleneck in each batch size.

ii) Longcharge can sell dried grids from $10 and the material cost is $3 for each grid. Longcharge wants to find the configuration that maximizes the profit. However, Hireoven wants its payment in advance. Accordingly, Longcharge believes that they can only afford the basic setup and one additional oven at one of these three steps. For example, if they decide to have two ovens at workstation A then the remaining workstations will have only one oven.

They also believe that the batch size is critical, so they are willing to pay the cost for the optimal batch size. The fixed price for each oven type is as follows A=$100, B=$150 and C=$150 per day. Using a batch size option of 20 instead of 8 incurs an additional cost of $100. In each day ovens work for 5 hours. If a batch cannot be produced completely within the strict 5-hour timeline, then Longcharge will not start the production of that batch. Based on the given information, what is the most profitable configuration for Longcharge in terms of ovens and batch size? Your answer should include the optimal batch size and whether or not they should use the extra oven. If it is optimal to use the extra oven, specify which station it should be used at.

iii) Varietycharge also has an agreement with Hireoven. They have a different deal with Hireoven. They don't pay any additional amount for changes in batch sizes. Moreover, they can use the basic flow plus one additional oven for a chosen workstation with a package deal of $580. As they were not sure about where they should put the additional oven, they started with the basic flow and obtained some data about their needs. Accordingly, they use 3 different batch sizes with following frequencies:

Batch Size 4: 30% of the total cumulative production time

Batch Size 15: 50% of the total cumulative production time

Batch Size 25: 20% of the total cumulative production time

For this given historical data, where should they locate their additional oven (workstation A, B or C)?