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Suppose that operators have enough training to operate both the bronze machines and the injection molding machine for the plastic sprinklers. Currently, AlwaysRain has 10 such employees. In anticipation of the ad campaign described in problem 5, management approved the purchase of two additional bronze machines. What are the labor requirement implications?

Step-by-step solution

  1. Step 1 of 6

    Forecasting refers to prediction of the future demand based on the past and current demand. Forecast helps to reduce the gap between demand and supply. It is also useful to procure the resources and outline the needs to meet the demand.

  2. Step 2 of 6

    Following data is available regarding the ARI company:

    Bronze machine requirements = 2 operators

    Bronze machine capacity = 12,000 sprinklers

    Bronze machine = 3


    Plastic machine requirements = 4 operators

    Plastic machine capacity = 200,000 sprinklers

    Plastic machine = 1


    Yearly demand forecast for company ARI for the next 4 years is given as follows:

    Picture 1

  3. Step 3 of 6

    Calculate the total number of plastic and bronze sprinklers required in each year, as follows:

    Picture 4

    Picture 7

  4. Step 4 of 6

    Calculate the machine requirement, labor requirement and capacity utilization for bronze and plastic sprinklers, as follows:

  5. Step 5 of 6

    The excel sheet showing the calculations are given below:

    Picture 35

    Picture 1

    With the increase in demand of bronze sprinklers, more labor and machines will be required to meet the increased demand. This can be interpreted from the capacity utilization cells. This shows that the capacity utilization for Bronze production is greater than 100% in 3 rd and 4 th year, representing requirement of more resources.

  6. Step 6 of 6

    Company ARI’s current machine operators are well trained. They can operate bronze machines as well as injection molding machines. However, it is obvious that they can operate only one machine at a time, which could be either bronze machine or injection molding machine.

    From the capacity utilization cells, it is evident that the capacity utilization for Bronze production is greater than 100% in 3rd and 4th year. The situation that, one or more workers working on the same machine cannot exists practically, which is opposed to what the calculations shows. Thus, it implies that in the 3rd and 4th year, the company has insufficient labor and machine production capacity.

    Therefore, an addition of two more machines will create demand for at least two more operators. It is not important to consider whether an operator is capable of operating different machines, rather than the fact that he can operate only one machine at a time.

    Thus, one can say that with addition of two more machine the labor will also need to be increased, which will increase the cost for ARI.

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