Consider a process consisting of three activities required to make a cell phone case
Assume there exists an unlimited demand for the cases.
Activity 1 has a processing time of 6 minutes per unit.
Activity 2 has a processing time of 3 minutes per unit.
Activity 3 has a processing time of 5 minutes per unit.
All three activities are staffed by one worker and each worker gets paid $12 per hour.
1. Calculate the cost of direct labor? What is the meaning of direct labor to a firm?
2. Calculate the labor content? What is the labor content?
3. Calculate the average labor utilization? What is the meaning of this measure to the firm?
4. Assume the demand rate is 20 units per hour- What is the takt time? What is the meaning of the takt time?
5. Assume the demand rate remains at 20 units per hour. What is the target manpower?
6. Calculate the capacity of the process be if they could hire one additional worker and assign that worker to one of the Activities. Note the capacity in units
per hour. What is the meaning of that change? What effects does it have on the process?
7. If they could take 1 minute of task time from one Activity and give it to another Activity so the labor content could remain the same, what would be the new
capacity of the process in units per hour?
8. Calculate the capacity of the process be if they integrated the work so that all workers do all three tasks un units per hour?