Complete the questions

Caldecotte Ltd has been producing and supplying specialised parts and components to vehicle manufacturers for over 60 years. With demands for electric cars on the rise, Caldecotte Ltd has been struggling to meet the demand for components for electric cars. The production manager wants to ensure that these components are produced as efficiently as possible.

Division Y is responsible for producing components related to electric cars. This division produces three primary components as follows: Electric Energy Storage (EE), Ultracapacitors (UC) and Battery Modules (BM).

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A bottleneck has emerged in the use of the machines that produces these components. All three components require three stages of manufacturing as follows: a machine that assembles various parts, which are then filled with the necessary fluid and tested, and finally packaged. Mr Shaw therefore wishes to adopt throughput accounting in decision-making to optimise the use of bottleneck resources.

The information below has been supplied:

 

Machine   Hours Available Hours Per Unit Hours Per Unit Hours Per Unit
           
EE UC BM
Assembly (A) 2,500,000 7 5 6
Testing (T) 2,500,000 7 4 4
Packaging (P) 800,000 2 1 1
Sales demand in units EE UC BM
170,000 150,000 130,000

 

 

    EE UC BM
Sales 32 24 25
Material Cost -11 -14 -10

 

 

  • Calculate the utilisation rates and identify the bottleneck. Calculate the throughput accounting ratios and recommend the optimal level of production for each component.

(16 marks)

  • Analyse the results suggesting suitable actions which the production manager should take in the short and long run.

 

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