Reference no: EM133221643

PROCESS DESCRIPTION:

Hawkeye Electronics' manufacturing line produces circuit cards using 4 operations:

1. Solder Preparation

2. Component Placement and Soldering

3. Baking

4. Inspection 

Solder preparation uses a semi-automated machine. The time to process a circuit card on this machine is normally distributed with a mean of 10 seconds and standard deviation of 8 seconds.

After preparation, the card go to the component placement and soldering stage. In front of this stage is a storage bin which can hold a maximum of 2 cards. Note that if the bin is full, the solder preparation stops because there is no place to store the cards. Limiting it to 2 is Hawkeye management's way of controlling the amount of work-in-process inventory. A single worker manually performs the component placement and soldering operation. A study shows that the component placement time of each circuit card is normally distributed with mean processing time of 1.0 minute and a standard deviation of 0.108 minute. The worker is responsible for the quality of his work. He visually inspects each card and repairs it if defective. The repair time is also normally distributed with an average of 40 minutes and a standard deviation of 1.080 minute. About 5% of the cards is expected to be defective.

After soldering the components, there is a storage bin which can hold a maximum of 10 cards. Circuit boards are prepared (setup) for baking. The oven's capacity is 5 cards. To load the oven, boards are coated with epoxy and vertically stacked in a metal tray that slides out of the oven. This takes 7 minutes. Baking takes exactly 15 minutes.

After baking, the cards are inspected. Hawkeye currently has 3 inspectors. An existing study reveals that the inspection time of each circuit card is normally distributed with an average of 13 minutes and a standard deviation of 1.08 minutes.

Hawkeye's management believes sufficient demand exists for any additional circuit cards produced. Each card can be sold for a $ 2.00 profit. Hawkeye's in-house engineers identified 4 feasible projects to improve the existing process. Management will approve the project only if the project expenses can be repaid within one year with additional profits generated from new sales and/or cost savings. They are:

1. (Labor Right-Sizing Project) Hire (Layoff) inspectors. Each new inspector adds $1,000 to Hawkeye's payroll cost annually. Each laid off inspector only saves Hawkeye $500 (because $500 severance is paid out) .

2. (Bin Sizing Project) Remodel the storage bin's capacity between the solder preparation and component placement and soldering stations. There is a $400 fixed expense and a variable expense of $20 for every additional circuit card that can be stored in the remodeled storage bin.

3. (Quality Project) Reduce the proportion of defective cards that are reworked at the component placement and soldering operation. This project will cost $100 for each 0.01 reduction in the proportion of cards that are reworked.

4. (Setup Time Reduction Project) Reduce the cards prep time prior to baking. Each minute reduction in setup time will cost $30. Note that with the existing oven and quality of epoxy, setup time cannot be shorter than one minute. 

REQUIREMENTS:

It needs a five page memorandum to Hawkeye's CEO (in prose with 1.5 spacing and a 12 pt. font). You can include figure/charts for illustration if needed. Include in your memo the following:

1. An independent evaluation of each of the four projects. Determine the largest net profit Hawkeye can make from each project. Also evaluate and compare the projects' process metrics, i.e. maximum queue length, average wait time, and utilization of each step in the process. Discuss the tradeoffs (process metrics versus cost versus profits) and decide the best number for each project.

2. Rank the projects (the best, second best and so forth) . Take your top two projects and give your reasons why you consider them as your 2 best choices.

3. The takeaways (learning points) from your simulation experiments. Summarize your results by employing simple plots and small tables to explain relationships, for example, the relationship between the minimum number of cards in the oven per cycle and the number of completed cards (finished goods).

4. Your team's recommended project improvements. Suppose you can combine two projects together. It is possible that the combination of these two projects will give results that are entirely different from the results you obtained previously when you evaluated the projects independently. Recommend the best combination of projects. Give your reasons why you consider it your best choice.