Capacity Utilisation
Capacity
Concerns at Ice Delights
Bill Brown is the Operations Manager
at Ice Delight Ice Creams. He is responsible for overseeing all aspects of the
production process, from checking that the necessary ingredients arrive in time
at the factory, to staffing the production line.
His job is made more difficult by the
fact that levels of production often fluctuate, due to the nature of the
product, but is under pressure from the Directors of Ice Delight to improve
efficiency and lower cost per unit for the tubs of ice cream they
produce.
The machinery that Ice Delight own
and use for producing their ice cream products is somewhat outdated, and Bill
often finds himself having to halt production whilst engineers fix problems
with the conveyor belt.
However production levels are
generally high enough to fulfil most of the orders Ice Delights receive each
month, and current levels of output are around 12,000 tubs per week.
Based on current shift patterns, and
the supposed maximum output of the machinery, Bill has calculated that Ice
Delights could potentially produce a further 3,000 tubs per week.
Many of Bill’s staff have been
working for Ice Delights for many years and are good at their jobs, however
most have young families and prefer to only work their contracted hours, with
no overtime added on.
1. Calculate the Capacity Utilisation for Ice Delights
(4 marks)
2. Assess two implications for Ice Delights of
operating at this level of capacity utilisation? (8 marks)
3. Assess whether more capital intensive production would be the best option available to Bill when responding to the requests of the Directors (10 marks)
