Question: a plastic molding machine produces a product whose annual demand...
A plastic molding machine produces a product whose annual demand is in the millions.
The machine is automated and used full time just for the production of this product. The
molding cycle time = 45 sec. No tooling is required other than the mold, which cost
$100,000 and is expected to produce 1,000,000 moldings (products). The plastic molding
compound costs $1.20/lb. Each molding weighs 0.88 lb. The only labor required is for a
worker to periodically retrieve the moldings. Labor rate of the worker = $18.00/hr
including overhead. However, the worker also tends other machines and only spends 20%
of his time on this machine. Setup can be ignored because of the long production run. The
molding machine was purchased for $500,000 installed, its anticipated life = 10 years, and
it operates 6000 hours per year. Equipment overhead rate = 30%. Assume availability =
100% and scrap rate = 0. Determine (a) the hourly production rate of the machine, (b)
annual quantity of product molded, and (c) cost per piece.