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Chapter 6: Problem 5

Indicate how each of the following might promote and impede the objective to maximize long-run profitability: a. Decrease average cycle time b. Decrease WIP c. Increase product diversity d. Improve product quality e. Improve machine reliability f. Reduce setup times g. Enhance worker cross-training h. Increase machine utilization

Short Answer

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Answer: Decreasing average cycle time can help reduce production costs, improve customer satisfaction, and increase output, which can lead to higher long-run profitability. However, if not managed properly, it may also result in decreased product quality and customer satisfaction. On the other hand, improving product quality can lead to increased customer satisfaction, decreased returns, and a stronger company reputation, ultimately resulting in increased long-run profitability. However, it may also increase production costs if not managed properly. Balancing both factors is essential to maximize long-run profitability.

Step by step solution

01

Benefits of Decreasing Cycle Time

Decreasing the average cycle time means that a product or service goes through all stages of production faster. This can help reduce production costs, improve customer satisfaction, and increase output, leading to higher long-run profitability.
02

Drawbacks of Decreasing Cycle Time

If reducing cycle time is achieved by sacrificing quality control or adding stress to workers, it can lead to more defects and a decrease in the quality of the final product. These drawbacks may consequently lead to a decrease in long-run profitability. #b. Decrease WIP#
03

Benefits of Decreasing WIP

A decrease in Work in Process (WIP) inventory could lead to reduced holding costs, improved cash flow, and less risk of inventory obsolescence, which result in increased long-run profitability.
04

Drawbacks of Decreasing WIP

Decreasing WIP might result in production delays or capacity underutilization if there is not enough inventory available when needed. This may negatively affect long-run profitability. #c. Increase product diversity#
05

Benefits of Increasing Product Diversity

Increased product diversity allows a company to serve a wider range of customer needs and appeal to a broader market spectrum, which may lead to increased long-run profitability.
06

Drawbacks of Increasing Product Diversity

Increased product diversity may result in complexity in production and inventory management, higher setup times, and potential loss of focus, which might cause a decrease in long-run profitability. #d. Improve product quality#
07

Benefits of Improving Product Quality

Improved product quality may lead to increased customer satisfaction, decreased returns, and a stronger company reputation, ultimately resulting in increased long-run profitability.
08

Drawbacks of Improving Product Quality

Improving product quality may increase production costs, which could negatively affect profitability if not managed properly. #e. Improve machine reliability#
09

Benefits of Improving Machine Reliability

Increased machine reliability leads to reduced downtime, decreased maintenance costs, and more consistent production, which can contribute to higher long-run profitability.
10

Drawbacks of Improving Machine Reliability

The initial investment required to improve machine reliability might be costly, but the long-term benefits often outweigh these upfront costs. #f. Reduce setup times#
11

Benefits of Reducing Setup Times

Reducing setup times reduces production delays, increases efficiency, and allows for faster response to customer demand, contributing to increased long-run profitability.
12

Drawbacks of Reducing Setup Times

Reducing setup times might require investments in new machinery, employee training, or process modifications, which might be costly in the short-term. #g. Enhance worker cross-training#
13

Benefits of Enhancing Worker Cross-Training

Cross-trained workers are more versatile, which reduces downtime due to worker absences and increases overall efficiency, leading to increased long-run profitability.
14

Drawbacks of Enhancing Worker Cross-Training

Cross-training often requires an investment in time and training resources, resulting in short-term costs, but it typically creates a more efficient and productive workforce in the long run. #h. Increase machine utilization#
15

Benefits of Increasing Machine Utilization

Higher machine utilization means that machines are used more efficiently, reducing idle time and increasing output, which contributes to higher long-run profitability.
16

Drawbacks of Increasing Machine Utilization

Increased machine utilization might lead to increased wear and tear on machines, requiring more frequent maintenance or replacement, which could negatively affect profitability in the short-term before yielding long-term benefits.

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Most popular questions from this chapter

How can the concept of "conjectures and refutations" be used in a practical problem-solving environment?

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