After thoroughly analyzing the information available on TI, I have identified three critical issues that need immediate attention. These include the capacity crunch in meeting forecasts, expectation to reduce the cost per watch, and a lack of efficiency of the workers. In order to tackle these issues, I recommend reducing the cycle time, increasing capacity in subsequent years, and increasing worker efficiency. These recommendations will enable you to achieve the targets and put TI on the path of success
Capacity crunch: As per the forecasts for world market demand for electronic watches, the current capacity at TI is insufficient. In order to cater to this increasing demand, the capacity needs to be enhanced. The technological advancements have prompted the business team at TI to set high forecasts and that has added pressure on the production capacity.
Expectations to reduce cost: The current cycle time of 21 seconds and the total number of 48 workers on the assembly line lead to the per unit labor cost of $0.80. In order to persist with TI’s policy of consistent cost reduction with improved efficiency, it is extremely crucial to either reduce the number of workers on assembly line or decrease the cycle time.
Workers’ inefficiency: As per the ideal scenario, only 38 workers are required to efficiently operate the assembly line under consideration. However, there are currently 48 operators operating it. Firstly this is due to few non-standard operations being carried out, and secondly due to the unscheduled breaks taken by the operators. This overall inefficiency leads to an increase in operation time and cost.
Reduce cycle time: The most important thing that TI needs to accomplish is that it needs to reduce the cycle time, which will eventually bring down the labor cost per unit. The cycle time can be reduced to 18 seconds by appropriately adding more workers for certain operations (explained in Appendix 1). This would...
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