Space Age Furniture Company The Space Age Furniture Companymanufactures tables and cabinets to hold

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Space Age Furniture Company The Space Age Furniture Companymanufactures tables and cabinets to hold microwave ovens andportable televisions. These products are made in various sizes andwith various features, but all follow basically the same productionand assembly operations. However, two of these products—the Saturnmicrowave stand and the Gemini TV stand—have a part (no. 3079) thatrequires machining on a special lathe used only for making thatpart. At present the machine is run by Ed Szewczak, a machinist whoalso operates other machines in Space Age’s shop. Once set up andstarted, the lathe can run nearly unattended. However, themachinist must be present (even if not actually attending themachine) any time one of the machines, including the lathe, is inoperation. At present, Ed works a regular 40-hour week. However,due to the workload for producing part 3079, it has been necessaryto schedule frequent overtime for him in order to finish thenecessary parts on time. Coral Snodgrass, operations manager forSpace Age, has just heard from Ed’s foremen that Ed is becomingunhappy about so much overtime. As Coral knows, Ed has been withthe company a long time and is an excellent, reliable employee.Skilled machinists with Ed’s experience and employment record areextremely difficult to find. Coral wonders what can be done toalleviate this problem. Recently, Space Age began using an MRPsystem that has helped reduce inventories greatly and improveon-time deliveries. In fact, Space Age carries no finished-goodsinventory. Instead, everything in the master schedule is beingproduced for customer orders, so all products are shipped almostimmediately. Previously Space Age had estimated that it cost $1.25per week to store each Gemini and $1.50 per week to store eachSaturn that wasn’t shipped immediately. The master schedule forproducing these two items for the next six weeks is shown below.Master Schedule Week 1 2 3 4 5 6 Gemini 600 400 700 500 400 600Saturn 300 400 400 600 300 300 The part in question, 3079, is usedin two different subassemblies: no. 435, which is used in theGemini TV stand, and no. 257, which is used in the Saturn microwavestand. One of part 3079 is used in each subassembly, and one ofeach subassembly is used in each of the final products. Part 3079may be produced in any quantity since the lathe that makes it isnot used for anything else. However, both of the subassemblies areproduced using the same equipment. To minimize change over time,Space Age has decided that these subassemblies should be made inminimum quantities of 1,000 at a time, although there is no problemwith capacity on the equipment that makes them. In fact, an orderfor 1,000 of subassembly 435 is due to be received in week 1, as isan order for 1,000 of subassembly 257. Lead time for both thesesubassemblies is one week, and no inventory is expected to be onhand for either part at the beginning of week 1. There is not anyon-hand inventory of part 3079, and there are no orders in process.Ed Szewczak earns $22 per hour and gets a 50% premium for anyovertime work. Whenever part 3079 is made, there is no set-up time,but processing takes 0.03 hour per unit. It costs $0.25 per week tohold any of these parts over from one week to the next. The cost ofholding each subassembly in inventory is $0.75 per unit perweek.

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