Assignment No: 2

(Group 1)
Amit Gupta Ashish Srivastava Deepak Khare Mohit Naman Harpreet Singh Boparai

Question1: What steps can be taken to loosen the constraint in Coating and Sharpening? Answer 1: Adding an inspection station before coating and sharpening so valuable time is not wasted working on defective units Cross training workers in other departments so they can help out in coating and sharpening Outsourcing some of the work that would normally be performed internally by coating and sharpening Putting buffer inventory before coating and sharpening to make sure the department doesnt run out of items to work on. Reengineering the coating and sharpening operation to make it more efficient Make sure that coating and sharpening isnt shut down due to workers taking breaks at the same time.

Question 2: Consider Model C210 and the Model D400 chisels. Which product should be emphasized given the constraint in Coating and Sharpening cannot be loosened? Answer 2: The model C210 should be emphasized because it generates a higher contribution margin per unit of the constraint. Model C210 Model D400 Contribution margin per unit $200.00 $350.00 Time in coating and sharpening .2 hours .8 hours Contribution margin per hour $1,000.00 $437.50

Question 3: Focusing only on the Model C210 Chisel and the Model D400 Chisel, what would be the benefit to the firm of gaining one more hour of production time in Coating and Sharpening? Answer 3: The benefit would be $1,000 since the time would be spent working on the Model C210.

Question 4: What would be the incremental profit associated with adding an inspection station before coating and sharpening? Answer 4: The average contribution margin per hour spent in coating and sharpening is $800. Given the inspection station will save 240 hours, this means the company can generate an additional $192,000 of profit ($800 contribution margin per hour 240 hours). Hopefully, this makes the point that companies can generate large incremental profits by loosening constraints.