Hutchinson Corporation has zero debt - it is financed only with common equity. Its total assets are $330,000. The new CFO wants
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Solution :
A B C D
The Activity of time per unit(min) (X) 0.25 0.33 0.2 0.5
Capacity per worker(units/min) (Y) 4 3 5 2
Number of workers (Z) 2 3 2 4
Capacity (Units/min) (ZxY) 8 9 10 8
A and D re the bottlenecks with a minimum capacity of 8 units/min
Hence, initial system capacity = 8 units/min
It is given that activity time per unit in D step is min per unit
Capacity/worker = 1/0.25 = 4 per min
Number of worker for D = 4
New capacity of D per min = 4 x 4 = 16 units
Steps A B C D
New capacity(units/min) 8 9 10 16
Therefore now, step A is the bottleneck as it has the lowest capacity of 8 units/min.
Capacity of the entire process = 8 units/min