Tuff Rider, Inc., manufactures touring bikes and mountain bikes in a variety of frame sizes, colors, and component combinations. Identical bicycles are produced in lots of 100. The projected demand, lot size, and time standards are shown in the following table:
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Each of these units must be processed by a machine that Macon considers to be their process bottleneck. The plant operates on two 8 hour shifts, 5 days per week, 52 weeks per year. Table 6.2 provides the time standards at the bottleneck, lot sizes, and demand forecasts for the three units. Because of demand uncertainties, the operations manager obtained three demand forecasts (pessimistic, expected, and optimistic). The manager believes that a 20 percent capacity cushion isbest.