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A Systematic Approach to Long-Term Capacity Planning - Purple Swift manufactures birdhouses in lots of 10. Each birdhouse takes 45 minutes to paint. After 10 birdhouses are painted, the company switches paint color which requires a 1-hour changeover. The company works 8 hours per shift, one shift per day, 220 days per year. Currently the company has one paint booth. What is Purple Swift’s paint capacity cushion if it builds 2,000 birdhouses per year?

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Answer:

3.4%

Explanation:

The computation of the  Purple Swift’s paint capacity cushion is shown below:

Time to paint 10 birdhouses (45 × 10 ÷ 60) 7.5 hours

Changeover time  1 hours

Total Operations time per lot (7.5 + 1) 8.5 hours

Hours available per year (8 × 220)   1760  

Capacity (number of lots each year) (1760 ÷ 8.5) 207.06  

Capacity (number of birdhouses each year) =207.06*10 2070.6  

Actual Production given 2000  

Utilization (2000 ÷ 2070.6) 96.6%  

Capacity cushion = 100% - Utilization

= 100% - 96.6%

= 3.4%

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