Produced for same average per-unit cost as the present cost

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Reference no: EM131481335

Changeover of fixtures on a machine takes 35 minutes. Following the changeover, an average of four parts must be produced and discarded before the correct setting is achieved. For each part the processing time is 2 minutes and the material cost is $1.50. The labor cost for a skilled setup person to do the changeover and adjustment is $15.50 per hour. The labor cost of the machine operator is $10.50 per hour. Currently, the part is produced in batches of 50 units. Suppose the setup procedure could be simplified so that the operator would be able to do it and not have to make any adjustment in the setting. What must the fixture changeover time be reduced to such that a batch size of 20 units could be produced for the same average per-unit cost as the present cost? Assume the per-unit cost includes labor and material costs of setup and production; also, assume the machine's excess capacity is ample and is not a consideration.

Reference no: EM131481335

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