Process Requirements

I = O + Ps*I ---> I = O/(1-Ps)

Input/Output analysis

FinalOutpu t
Input 
(1  Ps1 )(1  Ps2 )...(1  Psn )
Machine Requirement

T *P
N 
60 H * C

Where
N is the required number of machines
T is the time required for per operation (in minutes)
P is required production per day
H number of hours of production per day
Operator Requirement
C is the use of equipment (ex. 85 percent of the time, it is
T *P
running)

N 
60 H * C
Where
N is required number of crews (manpower)
T is the time required for per operation (in minutes)
P is required production per day
H number of hours of production per day
C Percentage of the total time person is available (utilization)
X: Number of good units
P(x): probability of producing exactly X good units
Q: Quantity of production (Input)
C(Q, x): Cost of producing Q units
R(Q, x): Revenue from producing Q units
P(Q, x): Profit from producing Q units
E[P(Q)]: Expected profit when Q units are produced

Q
E  P (Q )    P (Q, x) P( x)
x 0
Q
E  P (Q )     R (Q, x)  C (Q, x) p( x)
x 0
x ) p ( x )
 A foundry produces castings to order. An order for 20 custom-desig
been received. The casting process costs $1100 per unit scheduled.
sold, it has a recycle value of $200. The customer has indicated a w
$2500 per casting for 20 acceptable castings—no more, no less! Bas
records, the probability distributions given in Table 2.6 have been e
many castings should be scheduled

X = 20 casting is needed (No more, no Less)

C = $1100/unit
Recycling Value = $200
Price = $2500

X 20
C 1100
R 200
P 2500
custom-designed castings has So
t scheduled. If a casting is not
ndicated a willingness to pay  $200Q
e, no less! Based on historical R (Q, x )  
6 have been estimated. How $2500 * 20  (Q 
duled
C (Q, x )  $1100 * Q
 (200 
P (Q, x )  
 $2500 * 20  (Q 

ess) 19 Q
E  P (Q)    900Q * p (i )  
i 0 i 2
19 Q
   900Q * p (i )    46,000
i 0 i  20
 Solutions
$200Q x  20
* 20  (Q  20) * 200 x  20
Q
(200  1100 ) * Q x  20
* 20  (Q  20) * 200  1100 * Q x  20

Q
Q * p (i )    50,000  200Q  4000  1100 Q  p ( j )
i  20
Q

  46,000  900Q  p( j )
i  20
 -900Q X<20
P(Q,x) 46,000-900Q X>=20
Good Casting Number o
X/Q 20 21 22
12 0.05 0.00 0.00
13 0.05 0.05 0.00
14 0.05 0.05 0.05
15 0.05 0.05 0.05
16 0.10 0.05 0.05
17 0.10 0.10 0.05
18 0.15 0.10 0.10
19 0.20 0.15 0.10
20 0.25 0.20 0.15
21 0.25 0.20
22 0.25
23
24
25
26
27
28
29
30
1.00 1.00 1.00

P(Q,x): Calculation of net income

Good Casting Number o
 X/Q 20 21 22
12 -18000 -18900 -19800
X>=20 13 -18000 -18900 -19800
14 -18000 -18900 -19800
15 -18000 -18900 -19800
16 -18000 -18900 -19800
17 -18000 -18900 -19800
18 -18000 -18900 -19800
19 -18000 -18900 -19800
20 28000 27100 26200
21 27100 26200
22 26200
23
24
25
26
27
28
29
30
Expected profit -6,500 1,800 7,800

Expected profit
25000

20000
18000
16600
15200
15000
11500
d profit

10000
7800
 20000
18000
16600
15200
15000
11500

Expected profit
10000
7800

5000
1800

0
20 21 22 23 24 25 26

-5000
-6500

-10000

Number of casting produced (Q)

 Number of casting produced (Q)
23 24 25 26 27 28 29
0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.05 0.00 0.00 0.00 0.00 0.00 0.00
0.05 0.05 0.00 0.00 0.00 0.00 0.00
0.05 0.05 0.05 0.00 0.00 0.00 0.00
0.05 0.05 0.05 0.05 0.00 0.00 0.00
0.10 0.05 0.05 0.05 0.05 0.00 0.00
0.10 0.10 0.05 0.05 0.05 0.05 0.00
0.15 0.10 0.10 0.05 0.05 0.05 0.05
0.20 0.15 0.10 0.10 0.05 0.05 0.05
0.25 0.20 0.15 0.10 0.10 0.05 0.05
0.25 0.20 0.15 0.10 0.10 0.05
0.25 0.20 0.15 0.10 0.10
0.25 0.20 0.15 0.10
0.25 0.20 0.15
0.25 0.20
0.25

1.00 1.00 1.00 1.00 1.00 1.00 1.00

tion of net income for combinations of x and Q

Number of casting produced (Q)
 23 24 25 26 27 28 29
-20700 -21600 -22500 -23400 -24300 -25200 -26100
-20700 -21600 -22500 -23400 -24300 -25200 -26100
-20700 -21600 -22500 -23400 -24300 -25200 -26100
-20700 -21600 -22500 -23400 -24300 -25200 -26100
-20700 -21600 -22500 -23400 -24300 -25200 -26100
-20700 -21600 -22500 -23400 -24300 -25200 -26100
-20700 -21600 -22500 -23400 -24300 -25200 -26100
-20700 -21600 -22500 -23400 -24300 -25200 -26100
25300 24400 23500 22600 21700 20800 19900
25300 24400 23500 22600 21700 20800 19900
25300 24400 23500 22600 21700 20800 19900
25300 24400 23500 22600 21700 20800 19900
24400 23500 22600 21700 20800 19900
23500 22600 21700 20800 19900
22600 21700 20800 19900
21700 20800 19900
20800 19900
19900

11,500 15,200 16,600 18,000 19,400 20,800 19,900

ected profit

20800
19400 19900
19000
18000
16600
0
 20800
19400 19900
19000
18000
16600
0

25 26 27 28 29 30

er of casting produced (Q)

 Good Casting
30 X/Q
0.00 nCx = n! / (n - x)! x! 12
0.00 p 0.95 13
0.00 14
0.00 15
0.00 16
0.00 17
0.00 18
0.00 19
0.00 20
0.00 21
0.05 22
0.05 23
0.05 24
0.05 25
0.10 26
0.10 27
0.15 28
0.20 29
0.25 30
1.00
Expected profit

30000

25000
 30000
30
-27000 25000

-27000 20000

-27000

Expected profit
15000 14080
-27000
-27000 10000

-27000 5000

-27000
0
-1509.64400639848
-27000 20

19000 -5000

19000
19000
19000
19000
19000
19000
19000
19000
19000
19000
19000
Good Casting Number of casting produce
X/Q 20 21 22 23 24
12 0.00 0.00 0.00 0.00 0.00
13 0.00 0.00 0.00 0.00 0.00
14 0.00 0.00 0.00 0.00 0.00
15 0.00 0.00 0.00 0.00 0.00
16 0.01 0.00 0.00 0.00 0.00
17 0.06 0.02 0.00 0.00 0.00
18 0.19 0.07 0.02 0.00 0.00
19 0.38 0.20 0.07 0.02 0.01
20 0.36 0.38 0.21 0.08 0.02
21 0.34 0.37 0.22 0.09
22 0.32 0.37 0.22
23 0.31 0.37
24 0.29
25
26
27
28
29
30
1.00 1.00 1.00 1.00 1.00
Expected profit -1,510 14,081 21,838 24,113 24,125

Expected profit
30000

25000 24125.1706734119
24112.5327347462
23444.2037792197
22589.8356763039
 Expected profit
30000

25000 24125.1706734119
24112.5327347462
23444.2037792197
22589.8356763039
21838.1399284949 21698.3101714798
20799.740242541
19899.
20000
Expected profit

15000 14080.705252256

10000

5000

0
-1509.64400639848
20 21 22 23 24 25 26 27 28

-5000

Number of casting produced (Q)

ber of casting produced (Q)
25 26 27 28 29 30
0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00
0.01 0.00 0.00 0.00 0.00 0.00
0.03 0.01 0.00 0.00 0.00 0.00
0.09 0.03 0.01 0.00 0.00 0.00
0.23 0.10 0.03 0.01 0.00 0.00
0.36 0.24 0.11 0.04 0.01 0.00
0.28 0.36 0.24 0.11 0.04 0.01
0.26 0.36 0.25 0.12 0.05
0.25 0.35 0.25 0.13
0.24 0.34 0.26
0.23 0.34
0.21
1.00 1.00 1.00 1.00 1.00 1.00
23,444 22,590 21,698 20,800 19,900 19,000

356763039
356763039
21698.3101714798
20799.740242541
19899.9626980394
18999.9949540867

26 27 28 29 30
Good Casting Number of casting p
X/Q 20 21 22 23 24
12 0.00 0.00 0.00 0.00 0.00
13 0.00 0.00 0.00 0.00 0.00
14 0.00 0.00 0.00 0.00 0.00
15 0.00 0.00 0.00 0.00 0.00
16 0.01 0.00 0.00 0.00 0.00
17 0.06 0.02 0.00 0.00 0.00
18 0.19 0.07 0.02 0.00 0.00
19 0.38 0.20 0.07 0.02 0.01
20 0.36 0.38 0.21 0.08 0.02
21 0.34 0.37 0.22 0.09
22 0.32 0.37 0.22
23 0.31 0.37
24 0.29
25
26
27
28
29
30
1.00 1.00 1.00 1.00 1.00
er of casting produced (Q)
25 26 27 28 3029
0.00 0.00 0.00 0.00 0.00
0.00
0.00 0.00 0.00 0.00 0.00
0.00
0.00 0.00 0.00 0.00 0.00
0.00
0.00 0.00 0.00 0.00 0.00
0.00
0.00 0.00 0.00 0.00 0.00
0.00
0.00 0.00 0.00 0.00 0.00
0.00
0.00 0.00 0.00 0.00 0.00
0.00
0.00 0.00 0.00 0.00 0.00
0.00
0.01 0.00 0.00 0.00 0.00
0.00
0.03 0.01 0.00 0.00 0.00
0.00
0.09 0.03 0.01 0.00 0.00
0.00
0.23 0.10 0.03 0.01 0.00
0.00
0.36 0.24 0.11 0.04 0.01
0.00
0.28 0.36 0.24 0.11 0.04
0.01
0.26 0.36 0.25 0.12
0.05
0.25 0.35 0.25
0.13
0.24 0.34
0.26
0.23
0.34
0.21
1.00 1.00 1.00 1.00 1.00 1.00
n'  (a  t ) /( a  b)
Total machine time (Cycle time)
n' 
Operator t ime per machine
Basic operations involves human and machine:
Concurrent activity (both machine and operator work together:
load, unload machines)
Independent operator activities – walking
Independent machine activities – machining

If found n’ is not an integer value (it will not be in most

cases), how do we determine the number of machine
for each person (m)
If m < n’ then operator will be idle
If m> n’ then machines will be idle
This question can be answered more accurately if we
know the cost of machining and operator
Machine 1 2 3
Loading/Unloading 2 2 2
Machining times 6 6 6
(a+t) 8 8 8 Machine 3
Machine 2 idle
Inspect and pack 0.5 Machine 1 L1
Walking/opertaor Operator L1
W1-2 0.5 3 0.5
W2-3 0.5 3
W3-1 0.5 3
(a+b) 9
 idle L3
idle L2 M2
L1 M1
L1 W1-2 L2 W2-3 L3 W3-1 idle
1 1.5 2 2.5 3 3.5 4 4.5 5 5.5
 M3
M2 idle U2
U1 L1
idle U1 L1 IP1 W1-2 U2
6 6.5 7 7.5 8 8.5 9 9.5 10 10.5
 idle U3 L3
U2 L2 M2
M1 idle
U2 L2 IP2 W2-3 U3 L3 IP3
11 11.5 12 12.5 13 13.5 14 14.5 15 15.5
 M3
M2 idle U2 L2
idle U1 L2 M1
W3-1 U1 L1 IP1 W1-2 U2 L2
16 16.5 17 17.5 18 18.5 19 19.5 20 20.5

12
L2

L2
21
A job shop has received on order for high-precision formed parts. The cost of producin
to be $65,000. The customer requires that 8, 9 or 10 parts be supplied. Each good part
of $100,000. However, if fewer than 8 good parts are produced, the customer cannot u
purpose, but can make use of some major components. In this case he agrees to buy al
for the price of the production cost. The manufacturer however needs to make some a
which will cost him $475 per part. If 8 or more good parts are produced, the customer
ones and will not make the purchase of the bad ones. If more than 10 good parts are p
not be purchased for any value. Based on the historical records, the probability distribu
estimated below. Determine the optimal batch size and expected profit. For the quanti
determine the probability of losing money on the transaction. Of these three choices, w
preferred?

X = 8,9, 10 part is needed

C = $65,000/unit
Recycling Value = $65,000/unit
Price = $100,000
Adjustment = $475/unit

X 8 9 10
C 65000
R 100000
A 475
 The cost of producing each part is estimated
plied. Each good part sold will produce revenue
he customer cannot use them for their original Good ones
e he agrees to buy all of them (good or bad)
eeds to make some adjustments on each part X/Q
duced, the customer will buy only the good 0
n 10 good parts are produced, the excess will
e probability distributions have been 1
profit. For the quantities of 10, 11 and 12,
hese three choices, which one is most 2
3
4
5
6
7
8
9
10
11
12

Revenue
65000Q
100000X
100000*10

Good ones
X/Q
0
1
2
3
4
5
6
7
8
9
10
11
12
ood ones Number of produced (Q)
X/Q 10 11 12
0 0.0000 0.0000 0.0000
1 0.0000 0.0000 0.0000
2 0.0000 0.0000 0.0000
3 0.0001 0.0000 0.0000
4 0.0012 0.0003 0.0001
5 0.0085 0.0023 0.0009
6 0.0401 0.0132 0.0040
7 0.1298 0.0536 0.0192
8 0.2759 0.1517 0.0690
9 0.3475 0.2866 0.1720
10 0.1969 0.3248 0.2906
11 0.1675 0.3012
12 0.1430
1.0000 1.0000 1.0000

Revenue Cost
65000Q 65000Q+475*Q
100000X 65000Q
100000*10 65000Q

ood ones Number of produced (Q)

X/Q 10 11 12
0 -4,750 -5,225 -5,700
1 -4,750 -5,225 -5,700
2 -4,750 -5,225 -5,700
3 -4,750 -5,225 -5,700
4 -4,750 -5,225 -5,700
5 -4,750 -5,225 -5,700
6 -4,750 -5,225 -5,700
7 -4,750 -5,225 -5,700
8 150,000 85,000 20,000
9 250,000 185,000 120,000
10 350,000 285,000 220,000
11 285,000 220,000
12 220,000
196,321 205,858 183,540
0.1797 0.0694 0.0242
produced (Q)

X<8
X=8,9,10
X>10

produced (Q)
A part requires operations A and B on a milling machine. It was calculated tha
produce sufficient number of these parts to satisfy the demand, the producti
parts per week should be scheduled. The milling machine requires tool chang
maintenance after every lot of 500 parts. These changes require 30 minutes.
machines required assuming that the company will be operating 5 days per w
day. The following information is known:

Operation Standard
(min)
time Efficiency Reliability
A 5 0.95 0.85
B 10 0.96 0.9

Solution
Q 5000
5000/500 10 times per week maintenance
Repair time 300 min
Available ti 5400 min
H 5100 min

A 6.07
B 11.35
17.42 18
 It was calculated that in order to
emand, the production quantity of 5000
e requires tool changes and preventive
require 30 minutes. Find the number of
perating 5 days per week, 18 hours per

ntenance
Multiple activity chart on the right shows the activities of 3 iden
a) Determine the length of independent machine activity, indep
b) Estimate the minimum cycle length.
a) Determine the ideal number of machines per operator.

a) Concurrent activity: a= 1+1 =2

Independent operator: b=0.5+0.5 =1
Independent machine: t=6

b) Min cycle length is the maximum of:

a+t = 2+6 = 8
and
3*(a+b) = 3* (2+1) = 9
Min cycle length is 9
c) n’=(a+t) /(a+b) = (2+6)/(2+1) = 2.67
 activities of 3 identical machines and 1 operator.
hine activity, independent operator activity and their concurrent activ

per operator.
ncurrent activity.