AIC Systems, established in 1992, was a printed circuit board maker for the PC business. They had some expertise in motherboards and realistic cards. By the 2000s, the organization had developed into an Original Design Manufacturer (ODM) empowering advancement and new era outlines. In 2007, the organization broadened into the generation of Net-books. In any case, AIC can't take care of the demand with the present operations. The generation is neither proficient nor viable. The firm has a couple of alternatives to enhance the sequential construction system by either expanding the movements or the mechanical production systems. Each of these choices will expand the work cost for the firm yet encourage in meeting the objective generation and process duration.
This is forcing them to run 10 or 12 hour shifts, which is not The company needs to solve the following issues in order to meet the growing demand: a) Are the floater line workers required on a permanent basis? b) Should the company start running third shift or start a new (5th) production line?
* Planned production/Shift/Line (Nos.)= 702
* Current Production/Shift/Line (Nos.)= 576 (in a 8 hour working shift) * Current Production/Shift/Line (Nos.)= 720 (in a 10 hour working shift) * With the increase in the actual operating cycle time compared to planned cycle time of 41 secs to 50 secs, the assembly line runs at an efficiency of 82% and produces 576 nos in a 8-hour shift which does not meet the demand. * So, the current scenario is to produce 720 nos in a 10-hour working shift to meet the demand. If we look closely this is more than the planned production output of 702 nos which was an ideal case Stduy solution. Station No| Planned Time (secs)| Actual Time (secs) for 8 hour shift| Actual Time (secs)-For 10 hour Shift| ReBalanced Time (secs)-For 8.35 hour Shift| ReBalanced Time (secs)-For 10 hour Shift| 1| 40| 40| 40| 40| 40|
There is an increased demand of 130000 forecasted|
Increase in Demand Forecasted|
| Current Production for 8-hour shift| Increase in Demand| Redistributed Production for 8.35 hour shift| Per Month| 119808| 130000| 130260|
Per Day| 4608| 5000| 5010|
Per Shift| 2304| 2500| 2505|
Balancing the current Assembly Line:
* Now, we have Station 2 and Station 6 to be bottlenecks of cycle time 50 secs. * At station 2, move operation 7 to station 3.
* This would have a high setup cost, but to ensure to be ready for the increasing demand and to not lose out on any opportunity cost due to sudden spikes it would be advisable to go for the new line.
Moreover the pattern of demand in the past being spiky investing in a new line would be beneficial. * And since commissioning of the line would take time, and since the demand only for the near future is known, this period can be used to start work on commissioning the line, by giving the labours to combat the current demand increase.
After a period of smooth operation, with expectation of further increase in demand, there is a need to find out if demanded production can be managed with existing system or another assembly line needs to be installed.............
Comparison of Planned and Actual Operating time on Work Stations
Current Monthly Output(Units)
Target cycle time
Labor cost analysis
- How efficient is netbook assembly at the Kaizhi plant?
- What is the monthly output of the plant?
- What is the theoretical efficiency of the planned line, looking only at direct labor on the assembly line?
- What is the actual efficiency of the assembly line?
- How effective is the current operation?
- What are the right criteria by which to evaluate it?
- Is the operation designed appropriately to meet demand?
- What is the financial impact of bringing the operation closer to full potential and achieving planned production levels?
- What is the planned production level in terms of monthly output?
- What is the financial impact of achieving the target cycle time?
- How important is reducing direct labor as a means to improve financial performance? (Assume each assembly line worker costs $500 per month)
- What recommendations would you make to Elias Chen?