The following sequence shows four operations for a computer chip assembly process and the effective capacity of each. Step 1: 500 chips/hour Step 2: 250 chips/hour Step 3: 200 chips/hour Step 4: 550 chips/hour Suppose the utilization is 70 percent of effective capacity. What is the actual output of the process?

The actual output of the process is 140 per hour

Explanation:

The Bottleneck step is the one which assemble minimum number of chips per hour . Step 3 produces minimum number of chips (200 chips per hour). Therefore step 3 is the bottleneck step.

Since the steps are interlinked in sequence, the capacity of the process will be determined by the capacity of the bottleneck process. Therefore, effective capacity of the process = 200 chips per hour

Since utilization is 70% of effective capacity , the actual output  of the process = Utilization x Effective Capacity

= 0.7 x 200

= 140 per hour

Thus, the actual output of the process is 140 per hour

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