AIC Netbooks

Q1) How efficient is the netbook assembly at the Kaizhi plant?

a) What is the monthly output of the plant?

As per given case we have following inputs:

Shift hours: 9 Hrs

Break: 1 Hr

Effective working time per shift = 9 – 1 = 8 Hrs

Shifts per day: 2; Working days per week: 6

Assuming 4 weeks per months, available working time: 8 * 2 * 6 * 4 * 3600 = 1382400 secs

Actual flow time (Bottleneck station time): 50 Secs

Production per month = Total working time / Flow rate = 1382400 / 50 = 27648 Netbooks/month.

Here we have assumed that the line filling has already been done and the process is operating
continuously.

b) What is the theoretical labour utilisation of the assembly line, looking only at the direct labour on the
assembly line?

For calculating the % labour utilization we have taken into consideration the process flow time and activity
cycle time at each station:

From the below table it is observed that station 9 has the maximum activity cycle time and it is
identified as the bottleneck. Hence the planned process flow time is equal to station 9 cycle time which
is 41 secs

% Utilization = Time taken per station / planned process flow time

Planned Planned %
XStati
time/Stati Worker/Stati Utilizati
on
on on on
1 40 1 97.56
2 41 1 100.00
3 39 1 95.12
4 40 1 97.56
5 39 1 95.12
6 40 1 97.56
7 40 1 97.56
8 37 1 90.24
9 41 1 100.00
10 38 1 92.68

Average theoritical % labor utilization = 96.34 %

c) What is the actual efficiency (Labour utilization) of the line?

% Actual efficiency (Labour utilization) = Time taken per station / Actual process flow time

From the below table it is observed that station 2 and station 6 have maximum activity cycle times. So
these two stations will act as bottlenecks and the process flow time will be equal to 50 secs.

Actual % Labor
Sr. No Labor/station
time utilization
1 40 1 80.00
2 50 1.2 100.00
3 39 1.2 74.71
4 45 1.2 88.23
5 39 1.2 74.71
6 50 1.2 100.00
7 49 1.25 97.51
8 37 1.25 69.48
9 48 1.25 76.19
10 46 1.25 90.19

Average Actual % labor utilization = 88.76 %

Q2) How effective is the current operations?

a) What are the right criteria by which to evaluate it?

Below are the criteria to evaluate the effectiveness of the current operations:

- Equipment downtime: This metric tells us what amount of time is wasted due breakdown of
machines. Further, we need to keep an eye on the machine breakdown at bottleneck stations
- Standardization of activities: If unplanned activities keep propping into the assembly line, there
might be delays and line stoppages.
- Proper line balancing: In the Q1 part a, we could see that some stations are utilised for less than
70% of time, whereas some others are above 90% of time. Hence, there needs to proper division
of activities across stations.
- Quality of training: Proper training ensures the line workers are working at their maximum
productivity.
- Usage of proper Poke yoke: This helps to avoid mistakes and thereby reducing the requirement
for rework.

b) Is the operation designed appropriately to meet the demand?

- As per our calculation above current monthly capacity is of 27648 Netbooks/ Month.
- Case states that company is expecting increased demand of 130,000 Netbooks per month in
coming months.
- It is evident that company does not have required production capacity.
- So here we are proposing a plan which consists of adding new assembly lines as well as an extra
shift.
 - We can assume that we start 3rd shift, now daily we can run 3 shifts with 8 Hrs with 1 Hr break per
shift

Total available time daily:

Per shift working hours with break = 7 hrs

Cycle time = 50

Total manufacturing capacity per day = 7 * 3600 * 3 / 50 = 36288

Considering increased capacity, we need = 130000 / 36288 = 3.6 assembly lines

So considering above calculation we need a total of 4 assembly lines. So, the company needs to build 3
new assembly lines.

Starting a 3rd shift ensures the workers are not overloaded with extended shifts and will not have a toll on
the mental & physical health of the workers. In addition, by doing so the productivity of the workers might
improve and there might be reductions in the time required for doing the tasks resulting in an increase of
throughput.

Here we also propose that the company should take in contract workers to meet the increased forecast
demand. This is more plausible as the demand of the netbooks is known to be fluctuating on a frequent
basis. Hence, whenever the demand dampens the company can cutoff of variable costs by relieving some
of the contract workers.