Identifying and Exploiting Constraints, Constraint Elevation Confer Company produces two different metal components used in medical equipment (Component X and Component Y). The company has three processes: molding, grinding, and finishing. In molding, molds are created, and molten metal is poured into the shell. Grinding removes the gates that allowed the molten metal to flow into the mold's cavities. In finishing, rough edges caused by the grinders are removed by small, handheld pneumatic tools. In molding, the setup time is one hour. The other two processes have no setup time required. The demand for Component X is 600 units per day, and the demand for Component Y is 1,000 units per day. The minutes required per unit for each product are as follows: Minutes Required per Unit of Product Product Molding Grinding Finishing Component x 5 10 15 Component Y 10 15 20 The company operates one eight-hour shift. The molding process employs 24 workers (who each work eight hours). Two hours of their time, however, are used for setups (assuming both products are produced). The grinding process has sufficient equipment and workers to provide 400 grinding hours per shift The Finishing Department is labor intensive and employs 70 workers, who each work eight hours per day. The only significant unit-level variable costs are materials and power. For Component X, the variable cost per unit is $40, and for Component Y, it is $50. Selling prices for X and Y are $90 and $110, respectively. Confer's policy is to use two setups per day: an initial setup to produce all that is scheduled for Component X and a second setup (changeover) to produce all that is scheduled for Component Y. The amount scheduled does not necessarily correspond to each product's daily demand. Required: 1. Calculate the time in minutes) needed each day to meet the daily market demand for Component X and Component Y. Net Time Required Molding 13,000 minutes Grinding 21,000 minutes Finishing 29,000 minutes What is the major internal constraint facing Confer Company? What is the major internal constraint facing Confer Company? Molding 2. Describe how Confer should exploit its major binding constraint. Specifically, identify the product mix that will maximize daily throughput. Number of Units Produced Component 600 units Component Y 564 units 3. Assume that manufacturing engineering has found a way to reduce the molding setup time from one hour to 10 minutes. How many units of Component X and Component Y would be produced? Number of Units Produced Component X 600 units Component Y 584 X units Feedback Check My Work 1. Don't forget to consider set-up time in the Molding Department. Which department has the least time available? 2. What is the contribution margin per unit of scarce resource? 3. Will this elevate the binding constraint
