What is the capacity of the factory

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Reference no: EM132224535

Mega Manufacturing company forcasts the follwing demand for a product (in thousands of units) over the next five years.

year 1 2 3 4 5

forecast demand 70 77 85 88 88

Currently the manufacturer has six machines that operate on a two-shift (8 hours each) basis. Twenty days per year are available for scheduled maintenance of equipment.

Assume there are 250 workdays in a year. Each manufactured good takes 20 minutes to produce.

a) What is the capacity of the factory?

b) At what capacity levels (percentage of normal capacity) would the firm be operating over the next five years based on the forecasted demand? (Hint: Compute the ratio of demand to capacity each year.)

c) Does the firm need to buy more machines? If so, how many? When? If not, justify.

Reference no: EM132224535

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