Efficiency, Utilization and Cycle Tim , business and finance homework help

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Problem 1: Efficiency, Utilization and Cycle Time (10 points)

You have started a lawn mowing business and need to measure how your business has been performing. You have determined that the standard time to mow a half acre yard is 60 minutes. Your company’s theoretical capacity is 27 yards per day and your company’s rated capacity is 19yards per day. Yesterday your company mowed 17 yards.

One of your employees, John, took 70 minutes to complete the last half acre yard he mowed. What was his efficiency? (2 points)

What was your company’s efficiency yesterday? (2 points)

What was your company’s utilization yesterday? (2 points)

You recorded the following times for one of your employees yesterday. Use this table to answer

questions d and e.

Step

Action

Standard Time (minutes)

1

Put gas in the lawn mower

2

2

Load mower into truck

2

3

Drive to customer’s house

20

4

Unload mower from truck

2

5

Mow customer’s lawn

60

6

Load mower into truck

2

7

Return to company

20

8

Unload mower from truck

2

Which step is the only value-added activity in this process? (2 points)

What is the Percent of Value Added Time for this process? (2 points)

Problem 2: Breakeven, Total Cost and Expected Value (9 points)

You are planning to open a bakery that specializes in cupcakes. You know the variable cost to make one cupcake is $0.50 and you expect to sell them for $3.00 each. The location you are considering has a fixed cost (rent, utilities, taxes, etc.) of $5,000 per month. You are unsure what the demand for your cupcakes will be, but have done some market research and estimated the following demand scenarios and probability of eachlevel of demand.

Demand Level

Monthly Cupcakes Sold

Probability

Low Demand

1,500

30%

Medium Demand

5,000

50%

High Demand

12,000

20%

How many cupcakes do you need to sell each month to break even? (3 points)

What is the total monthly cost (fixed plus variable) for your bakery if there is low demand for cupcakes? (3 points)

What is the expected value of the total monthly cost for your bakery? (3points)

Problem 3: Theory of Constraints (6 points)

The manufacturing company you work for has a four step assembly process shown in the flow diagram below.

Process 1

Capacity =

60 units/hr

Process 2

Capacity =

70 units/hr

Process 3

Capacity =

80 units/hr

Process 4

Capacity =

40 units/hr

What is the maximum output this assembly process could produce in 8 hours? (2 points)

If the capacity of Process 3 is increased to 90 units/hour, how many units can be assembled in 8 hours? (2 points)

If the capacity of Process 4 is increased to 90 units/hour, how many units can be assembled in 8 hours?

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Explanation & Answer

Please see attached file with the step by step solution to the three problemsI've included a plagiarism report in case you need it

Problem 1.
a) Per the data from the problem, we know that the standard time required to mow half yard
yard is of 60 minutes. On the other hand, we know that John needed 70 minutes to
complete his last half yard of the day. Assuming he had worked at standard time during
the rest of the day, we can estimate John’s efficiency by calculating the total time required
to mow 4 yards (equivalent to 8 h work day):
Time required to mow the first 3.5 yards (average speed) = 60*7 = 420 min
Time required to mow the last 0.5 yard = 70 min
Total time required to mow 4 yards/day = 420 + 70 = 490 min
Total average time required to mow 4 yards/day = 60*8 = 480 min
Efficiency = 1 – (490-480) / 480 = 1 – 10/480 = 0.979 (97.9%)

b) Considering that yesterday the company mowed 17 yards instead of the 19 it should have
mowed had everything worked properly, the efficiency was:
Efficiency = 17 real yards / 19 theoretical yards = 0.895 (89.5%)

c) Considering that yesterday the company mowed 17 yards instead of the 27 for which it
has been designed, the utilization was:
Utilization = 17 real yards / 27 theoretical yards = 0.630 (63.0%)

d) Considering the data from the table below, we see that the only step having added value is
step 5 (mowing), since it is when we are working for the customer

e) Taking the above data into account, we see that the time used in step 5 is of 60 minutes,
while the total time is of 110 minutes. Hence, the % of time used in the added-value task is
60/110 = 54.5%

Problem 2.
a) Considering the data available we know:
Costs:
Fixed costs = 5000/month
Variabl...


Anonymous
Excellent resource! Really helped me get the gist of things.

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