Capacity requirements planning Given the following production schedule in units and the production standards for labor and machine for this product, determine the labor and machine capacity requirements for each week. Then compute the percent utilization of labor and machines in each week if labor

Question

Capacity requirements planning Given the following production schedule in units and the production standards for labor and machine for this product, determine the labor and machine capacity requirements for each week. Then compute the percent utilization of labor and machines in each week if labor is 200 hours per week and machine capacity is 250 hours per week.

Production Schedule:
Week	1	2	3	4
Quantity	200	300	100	150
Standard Times:
Labor	.5 hour/unit
Machine	1·0 hour/unit

Accepted Answer

Convert the quantity requirements into labor and machine requirements by multiplying the quantity requirements by the respective standard times (i.e., multiply each quantity by .5 to obtain the labor hours and multiply each quantity by 1.0 to obtain the machine hours):

Production Schedule:
Week	1	2	3	4
Quantity	200	300	100	150
Standard Times:
Labor	.5 hour/unit
Machine	1·0 hour/unit

To compute utilization , divide the capacity requirements by the available capacity (200 hours per week for labor and 250 hours per week for machine) and multiply by 100. The results are

Week	1	2	3	4
Labor	50%	75%	25%	37.50%
Machine	80%	120%	40%	60%

Not that machine capacity in week 2 is overutilized(i.e., capacity is insufficient) because the utilization exceeds 100 percent. To compensate, some production could be shifted to weeks 1 and /or 3 where labor and machine time are available.

Question 12.P.3: Capacity requirements planning Given the following productio...

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