TABLE 4.2 CAPACITY INFORMATION FOR MACON CONTROLS TIME STANDARD DEMAND FORECAST Component Processing (hr/unit) Setup (hr/lot) Lot Size (units/lot) Pessimistic Expected Optimistic A 0.05 1.0 60 15,000 18,000 25,000 0.20 4.5 80 10,000 13,000 17,000 C 0.05 8.2 120 17,000 25,000 40,000 B.
Customary Pricing
There are various types of pricing strategies followed in the market. They are psychological pricing, odd pricing, free onboard pricing, customary pricing, prestige pricing, dual pricing, ruling pricing, negotiated pricing, mark up pricing, etc. each one can be explained as follows:
Multiple Unit Pricing
“Multiple-unit pricing is a practice where a company offers consumers a lower than unit price if a specified number of units are purchased.”
Macon Controls produces three different types of control
units used to protect industrial equipment from overheating Each of these units must be processed by a machine that
Macon considers to be their process bottleneck. The plant
operates on two 8-hour shifts, 5 days per week, 52 weeks per
year. Table 4.2 provides the time standards at the bottleneck,
lot sizes, and demand
of demand uncertainties, the operations manager obtained
three demand forecasts (pessimistic, expected, and optimis-
tic). The manager believes that a 20 percent capacity cushion
is best.a. How many machines are required to meet minimum
(pessimistic) demand, expected demand, and maximum
(optimistic) demand?
b. How many machines are required if the operations man-
ager decides to double lot sizes?
c. If the operations manager has three machines and be-
lieves that the plant can reduce setup time by 20 percent
through process improvement initiatives, does that plant
have adequate capacity to meet all demand scenarios
without increasing lot sizes?
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