Reference no: EM132306768

Now, consider a different system, one in which there are 3 departments/operations in sequence. (i.e. )

Let’s assume the following regarding this system: Department 1 can move 125 parts every ½ hour and there are currently 7 employees in Department 1. Department 2 has 8 machines.

Two workers are needed to operate each machine and currently there are 8 workers in department 2. Each machine in department 2 can produce 50 parts per hour. Department 3 can put the finishing touches on 250 parts per hour with 5 employees. Further, assume that workers in Departments 1, 2, & 3 earn $11, $13, and $12 per hour respectively. Also department 2 workers will work overtime if necessary while getting paid time and a half. Assume that the company currently works a standard 8 hrs. per day 5 days per week work week. For convenience assume that there are 4 weeks per month.

a) What is the monthly capacity and labor cost per part of each department?

b) If direct variable costs per part (aside from labor) are $3 and the company sells each part for $10. What is the gross margin per part?

c) What is the current monthly capacity of the entire system? Make one suggestion for balancing the line. (Need to show that the line will actually be balanced). What is the new monthly capacity? What is the new labor cost per part? What is the new gross margin per part?