Case Analysis – “Don’t bother me, I can’t cope” Operations Management Summary and context of the case The case deals with developing a plan to meet a new order received by a small assembly shop. The order requires increasing the capacity of both the sub-assemblies: Line A and Line B. Line A: The capacity of this line has to be increased from 315units/day to 420 units/per day. It employs 7 workers. The regular wage per worker is Rs.18/hour and the overtime wage is Rs.30/hour. The assembly consists of 16 different tasks with a defined precedence relationship. Overtime doesn’t lead to any rejection rate. Sane, the supervisor of Line A has demanded 2 more workers to meet the 33% increase in production requirement. Line B: The new order requires the production capacity of this line to increase to 210 units/day. It employs 2 workers. Overtime on this line leads to a rejection rate of 1% due to fatigue. The cost of unit rejected is Rs.420. Uma, the supervisor of Line B has also 2 more workers to meet the increased demand. The shop operates 8 hours a day. However, this includes 4 rest periods of 15 minutes each. An overtime of 2 hours is possible on both the lines. The issue in meeting the increased demand is that both the supervisors have asked for 2 additional workers whereas Shantha, the owner has specified that it would not be possible to hire more than 3 workers on a short notice. Also the cost of training workers is quite high i.e. Rs.6,000. It is also not very clear as to why 100% increase in workers is needed to produce 50% more on Line B, whereas only 30% increase in workforce is being demanded for an increase of 33% workload on Line – A. The analysis below deals with process flow diagram and assembly balancing to find out if the supervisors are justified in making their demands for additional workers.
1
Assembly Layout/Flow Diagram
2
3
Problems raised and changes/modifications required to resolve the problems. Shanta can recruit only 3 workers but each assembly line demanded two additional workers i.e. 4 in total. But due to limited budget constraints we can recruit only 3 workers and assume additional overtime. We need to decide which sub assembly actually requires two additional workers. Here, we are analyzing the possibility of additional workers in both the sub assemblies and the one in which the labor cost is minimum is the most feasible.
Analysis Line A Existing Production 315 Units/Day Activity 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Total Lead Time
Activity Time (Sec) 30 50 40 50 20 10 10 20 10 40 20 30 50 50 10 40 480
Immediate Predecessor None None 1 1 2 3 4,5 2 6 9 7 7 9 10 11 8,12
Cycle Time for 315 Units / Day = 420 Mins / 315 Units = 1.33 Minutes/ Unit = 80 Seconds / Unit No of Work Station required = Lead Time x Prod Units / Available Time = 6 Work Stations
Presently, Mr. Sane is using 7 workstations against the needed 6 work Stations as following. W/S
Activities
Time (Seconds)
Time (Minutes)
1 2 3 4 5
1,3 2,5 4,8 6,9,13 7,10,11
70 70 70 70 70
1.16667 1.16667 1.16667 1.16667 1.16667
Idle Time (Minutes) 0.163333 0.163333 0.163333 0.163333 0.163333 4
6 7
14,15 12,16
60 70
1 1.16667
0.33 0.163333
Available Time (Minutes) = 7 W/S x Cycle Time 1.33 Mins = 9.31 Idle time = 1.31 Efficiency % = 8 Mins / 9.31 Mins = 85.93 Line A Desired Production 420 Units/Day Cycle Time for 420 Units / Day = 420 Mins / 420 Units = 1 Minutes/ Unit = 60 Seconds / Unit No. of Work Station required = Lead Time x Prod Units / Available Time = 8 Work Stations w/s
Activities
Time (Seconds)
1 2 3 4 5 6 7 8
2 1,5 3,8 4,6 7,9,13 10,11 14,15 12,16
50 50 60 60 70 60 60 70
Maximum Production Capacity (# of Units / day) 504 504 420 420 360 420 420 360
With the given nature of certain tasks, we cannot group them in a way that each Work Station can have less or equal to 60 Seconds (Cycle Time) of tasks. Thus, Work Stations 4 and 8 would have Bottleneck capacity of 360 Units / Day, which is less then desired 420 Units/ Day. With Work Stations = 9, following organization would be suitable. w/s
Activities
Time (Seconds)
1 2 3 4 5 6 7 8 9
1 2 3,5 4,6 10 7,11,12 9,13 14,15 8,16
30 50 60 60 40 60 60 60 60
Maximum Production Capacity (# of Units / day) 504 504 420 360 420 420 420 360
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Available Time (Minutes) = 9 W/S x 420 Mins each day = 3780 Utilized time = Lead time 8 Mins x Units Produced 420 Units = 3360 Efficiency % = Utilized Time / Available Time 88.89 Line B –Existing Production 140 Units/ Day Activity Activity Time (Sec) A 40 B 50 C 70 D 20 E 50 F 40 G 60 H 30 Lead time 360
W/S
Activities
Time (Seconds)
1 2
A, b, c, d E, f, g, h
180 180
Immediate Predecessor None None A A A B, C E D, F, G 6 minutes
Maximum Production Capacity (# of Units / day) 140 140
Available Time (Minutes) = 2 W/S x 420 Mins each day = 840 Utilized time = Lead time 6 Mins x Units Produced 140 Units = 840 Efficiency % = Utilized Time / Available Time = 100.00 Line B –Desired Production 210 Units/ Day w/s
Activities
Time (Seconds)
1 2 3
A, b, d C, e F, g, h
110 120 130
Maximum Production Capacity (# of Units / day) 229 210 194
Production Capacity with 1 Hour Overtime 262 (Not used) 240 (Not used) 222 (Used for extra 16 Units only – 36 Minutes)
Available Time (Minutes) = 3 W/S x 420 Mins each day = 1260 Utilized time = Lead time 6 Mins x Units Produced 210 Units = 1260 Efficiency % = Utilized Time / Available Time 100.00
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Solution On analysis of the given case, as described in subsequent sections following is the recommendations. Line A: Solution 1 is suitable, if this order has to be continued for more than 91 working days. # Units Produced / Day
Per Unit Contributi on (Rs)
Per Day Contributio n (Rs)
Regular wages (Rs)
# of worke rs
Regula r hours
Over Time Hour s
Wages / Day + Overtim e
Contributio n / Day / Worker
420 (Desired) 420 (Desired) 315 (Old)
30
12600
18
9
8
0
1296
1256
30
12600
18
7
8
2
1428
1596
30
9450
18
7
8
0
1008
1206
Solution 1: This recommendation requires hiring two additional resources, which involves Rs. 12000 training cost and per day wages is Rs. 1296. Solution 2: This solution has continuing with 7 workers with 2 hours of overtime each day. The differential wage per day including overtime is Rs. 132 in this case. (12000 / 132 = 90.90)Line B: Solution 1 is suitable # Units Produced / Day
Per Unit Contributi on (Rs)
Per Day Contributio n (Rs)
Regular wages (Rs)
# of worke rs
Regula r hours
Over Time Hour s
Wages / Day + OverTim e
Contributio n / Day / Worker
210 (Desired) 210 (Desired) 140 (Old)
30
6300
18
3
8
1
529.2
1923.6
30
6300
18
4
8
0
576
1431
30
4200
18
2
8
0
288
1956
Solution 1: This recommendation requires hiring one additional resource, which involves Rs. 6000 training cost. In this case, the Efficiency of operation is maintained at 100%, but involved overtime for 1 worker for 1 hour. (Actually making 16 extra unit consuming 36 minutes on 3rd workbench), considering wages of Overtime and 1% rejection due to fatigue. Solution 2: This recommendation requires hiring two additional resources, which involves Rs. 12000 training cost. But wages exceeds to Rs. 576, more than solution 1.
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