Operations Management Processes Evaluation

I have divided the operations into three sections; section one for the analysis of the current situation of the company, section two and section three provides the analysis of the two alternatives provided. I have classified the calculations into three four basic determining elements: walking, production, compensation claims and the equipment. I then calculate the cost benefit analysis using these elements to determine which alternative is the best for the company. A. Analysis of the current situation of Taylor Inc. Operations a. Walking 27% of total labor is wasted in walking,

\$43 per hour * 17 people = \$731 of work per hour The company loses: 27% of \$731 per hour = \$197. 37 wasted per hour on the assembly line. For 8 hours the company loses: 8hrs * 197. 3 = \$1578. 96 Total amount spent in the assembly line: 8hrs * 17people * \$43 = \$5848 Therefore the company uses \$5848 in the assembly line; out of this \$1578. 96 is wasted in walking b. Production The company produces per hour = 208/8 = c. Compensation claims Injury Compensation claims per year: \$109000 * 4 = \$436,000 Distributing the total compensation claims cost to 1 hour:

1 year has 8760

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hours (365 days): \$436000/ 8760 = \$49. 77 claims per hour d. Lifting Physical lifting is 42 pounds B. Alternative 1 a. Walking \$43 * 6 people = \$258 is spent on workers per hour. Wasted motion: 1% of \$258 = \$2. 58 wasted motion per hour b. Production Producing 392 widgets in 8 hours Widgets produced in 1 hour: 392/8 = 49 widgets c. Compensation claims Injury compensation claims per year is 0. 3 or 30% Currently company compensates \$436000 annually. Therefore 30% of \$436000= \$130,800 per year Distributing the total comp claim cost to 1 hour:

1 year has 8760

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hours (365 days): \$130,800/ 8760 = \$14. 93 per hour We now know that the company compensation claims per our is \$14. 93 d. Lifting Physical lifting is 12 pounds e. Equipment Costs \$1300000 for 7 years The cost of this equipment per hour: 8760 hours * 7 years = 61320 hours The equipment cost per hour: \$1300000/61320 = \$21. 20 per hour C. Alternative 2 a. Walking 9people * \$43 = \$387 paid on assembly line Wasted motion; 8% of \$387 = \$30. 96 per hour (wasted motion) b. Production For 8 hours, 288 widgets are produced 288/8 = 36 widgets per hour

c. Compensation claim Injury compensation claims per year is 1. 9 or 190% Currently company compensates \$436000 annually. Therefore 190% of \$436000= \$828,400 per year Distributing the total comp claim cost to 1 hour: 1 year has 8760

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hours (365 days): \$828400/ 8760 = \$94. 57 per hour We now know that the company compensation claims per our is \$94. 57 d. Lifting Is reduced to 28 pounds e. Equipment Costs \$967,000 for 5 years The cost of this equipment per hour: 8760 hours * 5 years = 43800 hours The equipment cost per hour: \$967000/43800 = \$22. 08 per hour

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