VarPSTU Inc. has appointed you to advice on capacity decisi

VarPSTU Inc. has appointed you to advice on capacity decision for… VarPSTU Inc. has appointed you to advice on capacity decision for the next five years. Three products are sold: VarP, VarS and VarT. Marketing department has forecasted demand for the ensuing five years as follows:                                                   Yearly Demand (in 00s)                              Year 1          Year 2          Year 3          Year 4           Year 5VarP                       9                  9                  10                12                13VarS                       4                  5                  6                  7                  9VarT                       6                  7                  7.5               8.5               10VarU                       6                  7                  7.5               8.5               9.5 Currently, four manufacturing lines are in use, each of capacity 600 per year on two shift basis (300 working days per year) are in use. Each manufacturing line requires three operators to run. The four manufacturing lines are 10 to 15 years in service. The four products are made using the same manufacturing lines. Capacity of manufacturing lines (300 working days) on two shift basis available in the market are: 600 and 1,000 and 2,200 and 3,600. The 2,200 as well as the 3,600 capacity lines are the latest (proven technology) developed. Manpower required for each new manufacturing line are the same as employed today, except the latest developed lines which require one operator only. Further, the “power cost per unit produced” reduces by nearly 15 % on the newly developed lines. Policy of the company is to operate on two shifts – third shift is for coping with exigencies. The lead time to get the manufacturing lines installed and getting them operational is six months. Suggest the capacity required (manufacturing lines and manpower) over the next five years. You may consider discarding the current available manufacturing lines. Second-hand lines are not available. Subcontracting the products is not acceptable as a policy.    Engineering & Technology Industrial Engineering Operations Management STRATEGY 112

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