Question
For an assembly line, the production rate was 4 pieces per hour and the average processing time was 60 minutes. The WIP inventory was calculated. Now, the production rate is kept the same, and the average processing time is brought down by 30 percent.As a result of this change in the processing time, the WIP inventory
Options :
decreases by 25%
increases by 25%
decreases by 30%
increases by 30%
Answer :
decreases by 30%
Solution :
Given,
Processing time, P.T1 = 60 min = 1 hour
Production rate = 4/hr = 4 units per hour
Second case :
Production rate = 4/hour
But processing time reduced by 30%
∴ New processing time, P.T2 = (0.7 × 1) hour
New Production per hour = 4 × 0.7 = 2.8 units.
Thus, Work in progress has been reduced and decrease in
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