Macon Controls produces three different types of control units used to protect industrial equipment from overheating. Each of these units must be processed by a machine that Macon considers to be their process bottleneck. The plant operates on two 8-hour shifts, 5 days per week, 52 weeks per year. The table below provides the time standards at the bottleneck, lot sizes, and demand forecasts for the three units. Because of demand uncertainties, the operations manager obtained three demand forecasts (pessimistic, expected, and optimistic). The manager believes that a 20 percent capacity cushion is best.

a. How many machines are required to meet minimum (Pessimistic) demand, expected demand, maximum (Optimistic) demand?

b. How many machines are required if the operations manager decides to double lot sizes?

c. If the operations manager has three machines and believes that the plant can reduce setup time by 20 percent through process improvement initiatives, does that plant have adequate capacity to meet all demand scenarios without increasing lot sizes?

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Time Standard Demand Forecast Lot Size Processing (hr/unit) 0.04 0.20 0.05 Setup (hrlot(units/lot) Pessimistic Expected Optimistic 15,000 9,000 18,000 Component 60 80 120 16,000 12,000 24,000 27,000 17,000 37,000 8.7 Capacity Requirement (M) Demand Forecast Pessimisticmachines Expected machines Optimistic machines