The Printer Capacity Problem

You are designing a manufacturing system at a Greenfield site for a family of printers. You currently offer 8 printers whose annual demand is uncorrelated and forecasted as normally distributed with parameters as given in the table below (units are in ‘000).

The manufacturing system will entail a system of parallel lines. Each line will assemble and test printers. Each line can be dedicated to a printer type or can have some amount of flexibility. That is, a line can be designed to assemble and test any subset of the printer types.

Assume each line will have dedicated capacity of 100,000 units per year, regardless of whether it is dedicated or flexible. The annualized cost of building and operating a dedicated line for any printer type is estimated to be $ 1,200,000. Suppose that annualized cost building and operating a flexible line is the cost of a dedicated line, $1,200,000, plus an estimate of $120,000 to $150,000 for each additional product that the line can make. Thus a line that can assemble printers A, F and G will cost between $ 1,400,000 and $ 1,500,000 annually. The unit contribution margin of each printer is $25, that is, the difference between revenue and the cost of material and distribution.

Use Flexcap (Software on G Drive) to find a good capacity strategy for this facility.

Printer Type |A |B |C |D |E |F |G |H | |Mean annual Demand |80 |80 |60 |60 |40 |40 |20 |20 | |Std deviation of annual demand |10 |30 |10 |30 |20 |5 |10 |5 | |

In Flexcap, for all combination use a random generator seed (under Menu Options) of 1000. Use a simulation run length of 1500 (under menu Model and then Simulation).

Your report should contain justification of your choice and any assumptions made and your capacity strategy and of course quantitative results. The total page length should NOT exceed 4