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    AIC Netbooks

    Uploaded by

    Sriharsha Vavilala
    The document discusses three options to increase production of netbooks from the current 130,000 per month to meet demand: 1) provide overtime incentives to workers, 2) add a third 8-hour shift, or 3) add a new assembly line. It analyzes the projected monthly production for each option and determines that option 2 of adding a third shift would allow production of 165,888 units per month, meeting demand with extra time and is the preferred choice over the others.

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    Download as DOCX, PDF, TXT or read online from Scribd

    AIC Netbooks

    Uploaded by

    Sriharsha Vavilala
    354 views2 pages
    The document discusses three options to increase production of netbooks from the current 130,000 per month to meet demand: 1) provide overtime incentives to workers, 2) add a third 8-hour shift, or 3) add a new assembly line. It analyzes the projected monthly production for each option and determines that option 2 of adding a third shift would allow production of 165,888 units per month, meeting demand with extra time and is the preferred choice over the others.

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    AIC

    Original Title

    167017129 AIC Netbooks Docx

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    The document discusses three options to increase production of netbooks from the current 130,000 per month to meet demand: 1) provide overtime incentives to workers, 2) add a third 8-hour shift, or 3) add a new assembly line. It analyzes the projected monthly production for each option and determines that option 2 of adding a third shift would allow production of 165,888 units per month, meeting demand with extra time and is the preferred choice over the others.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    354 views2 pages

    AIC Netbooks

    Uploaded by

    Sriharsha Vavilala
    The document discusses three options to increase production of netbooks from the current 130,000 per month to meet demand: 1) provide overtime incentives to workers, 2) add a third 8-hour shift, or 3) add a new assembly line. It analyzes the projected monthly production for each option and determines that option 2 of adding a third shift would allow production of 165,888 units per month, meeting demand with extra time and is the preferred choice over the others.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Current rate of production is 50 seconds per unit per line

    Number of units in 1 hour = 3600/50 * 4 = 288


    Number of units per shift = 288 * 10 = 2,880
    Number of Units per day = 2,888* 2 = 5,760
    Number of Units per week = 5,776 * 6 = 34,560
    Number of Units per month = 1,38,240
    Although we are able to meet our target, the management feels that this model is
    not very sustainable. We can think of providing additional incentives to workers for
    the overtime.

    Option 2 Introduce a third shift of 8 hours


    With the current rate of production of 50 seconds per unit per line, our monthly
    production is
    Number of units in 1 hour = 3600/50 * 4 = 288
    Number of units per shift = 288 * 8 = 2,304
    Number of Units per day = 2,304 * 3 = 6,912
    Number of Units per week = 6,912 * 6 = 41,472
    Number of Units per month = 1,65,888
    If one more shift of same size is added, then production increases by 50% or 55,296
    units.
    Total units per day will be 165,888 units and the entire assembly line can work on
    78% efficiency to produce 130,000 units.
    Total working hours per day are 24.
    But because of breaks, each shift in actual if of 9 hours. Hence we can add 8 hour
    shift with 7 working hours.
    We know that 110,592 units per month are produced with 16 working hours per day.
    Hence 6,912 units per month are produced with 1 working hour per day.
    This means, we only need 3 additional work hours per day to meet the excess
    demand to reach 130,000.
    Thus, although this option with a third shift will meet the demand with some buffer
    time available, for just additional 3 working hours, option 1 is better. */

    New Analysis : We are able to produce well above the targeted 1,30,000. Hence,
    Floaters may not be required which was one of the area of concern studied by an

    internal task force. Chen who was assigned to analyse the permanent need of
    floaters can save labour cost(which is rising at a rapid pace in the Shenzhen area) of
    floaters.
    Also, even the labour cost of main assembly line workers can be reduced by
    decreasing the shift hour to 7 working hours per shift as compared to 8 hours
    earlier.
    Number of units in 1 hour = 3600/50 * 4 = 288
    Number of units per shift = 288 * 7 = 2,016
    Number of Units per day = 2,016 * 3 = 6,048
    Number of Units per week = 6,048 * 6 = 36,288
    Number of Units per month = 1,45,152
    Thus, even with the three 7 working hour shifts, we are able to produce well above
    the expected demand of 1,30,000 Netbooks per month.
    Option 3 Introduce another assembly line:
    /* We are currently producing 110,592 units per month with 4 assembly lines.
    Hence, units per month per line = 27,648
    If we introduce one more assembly line, total production per month = 110,592 +
    27,648 = 138,642
    This will cater to the demand although additional cost required to set-up the
    assembly line would be huge.
    */
    5 assembly lines with two shifts of 9 hours (8 working hours )
    Number of units in 1 hour = 3600/50 * 5 = 360
    Number of units per shift = 360 * 8 = 2,880
    Number of Units per day = 2,016 * 2 = 5,760
    Number of Units per week = 5,760* 6 = 34,560
    Number of Units per month = 1,38,240
    Thus, introducing a new assembly line yields the same output as delivered by
    current approach. This is not a preferred option because investing in a new
    assembly line would not increase my capacity(given the shifts are not extended
    beyond regular hours)
    Option 2 is the best choice, as it increases my capacity and makes full utilization of
    the four assembly lines. There would be cost associated with training new workers
    for the third shift but the total labour cost once the new workers get trained would
    almost be the same as in the case of introduction of a new assembly line

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