The average annual investment cost of a workstation in New Jersey has been calculated to be $100,000. It has been calculated to be $150,000 in Kentucky. The hourly cost at a workstation is $60 in New Jersey and $40 in Kentucky. How do the two plants compare with respect to the cost of labor for making a car? For each location, what is the breakeven volume and what is the total cost at breakeven? Using the QMpom module called Capacity Management Models (Cost-Volume and Breakeven) will facilitate solving Problem 5.
An interesting comparison can be drawn between the Volvo method of building autos in Sweden and that of U.S. auto companies. Specifically, the Volvo Company has pioneered a team approach for assembling an auto. The Volvo team builds the car on a platform. Even the engine is put together by the same team and mounted on the chassis. This means that the workers come to the work instead of the work coming to the workers.
If it takes Volvo workers 40 hours to assemble a car in this way, what is the cycle time?
How many stations are there?
Analyze the pros and cons of the Volvo assembly system.
Does the Volvo system constitute a synthetic flow shop?
Volvo does not use this team assembly method for its U.S. plant. Why is that so?