Reference no: EM132596571
You are considering two competitors' machines to extrude plastic for computer monitors-one from Baxter and the other from Zonic. You will buy all machines from one of these suppliers. The demand for computer monitors is approximately 34,000 per year. There is a good chance that demand will increase by 5 percent over the next few years.
Data on the machines follow:
Baxter Zonic
Processing time (minutes per unit) 40 36
Units per manufacturing batch 500 400
Setup time (minutes per batch) 240 660
Question 1: Your operation runs 21 hours per day, 300 days per year. As you can see, Zonic has a shorter processing time. Your company has experience with Baxter. There is less of a comfort level with Zonic. However, given the reduced processing time, management feels it must be considered. However, if you go with Zonic, management has mandated that you maintain a 15 percent capacity cushion. Your capacity cushion for Baxter would need to be 5 percent. Both machines are similarly priced. How are the two machines different?
Question 2: Make a recommendation as to which type of machine should be purchased. Be sure to consider today's demand and a scenario in which demand increases by 5 percent.
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