AIC Systems, located in Taichung, Taiwan, is a manufacturer of printed circuit boards, primarily for motherboards and video cards for personal computers. The firm is considered an original design manufacturer (ODM) and takes an active role in innovating and designing each new generation of components. By doing in-house design and development, the company has been able to foster exclusive, long-term relationships with its customers. The firm decides to diversify its portfolio to include consumer electronics with a particular focus on mobile technology. The goal is to move from manufacturing components for other computer companies to developing the firm's own line of branded consumer electronics. The new netbook market provides an opportunity for AIC Systems to design and manufacture a branded product in the mobile electronics industry. The production manager has created an assembly line for producing the new netbooks, and after three months of production he must consider ways to improve efficiency and reduce production costs. Students must perform a quantitative analysis of the existing assembly-line system and make recommendations to reach optimal efficiency.
Comparison of Planned and Actual Operating time on Work Stations
Current Monthly Output(Units)
Target cycle time
Labor cost analysis
How efficient is netbook assembly at the Kaizhi plant?
What is the monthly output of the plant?
What is the theoretical efficiency of the planned line, looking only at direct labor on the assembly line?
What is the actual efficiency of the assembly line?
How effective is the current operation?
What are the right criteria by which to evaluate it?
Is the operation designed appropriately to meet demand?
What is the financial impact of bringing the operation closer to full potential and achieving planned production levels?
What is the planned production level in terms of monthly output?
What is the financial impact of achieving the target cycle time?
How important is reducing direct labor as a means to improve financial performance? (Assume each assembly line worker costs $500 per month)
What recommendations would you make to Elias Chen?