CNC Cell Capacity at Halbrook Machining
Halbrook Machining supplies hydraulic manifolds to an OEM. Its bottleneck is a five-machine CNC lathe cell running two 8-hour shifts, five days a week; planned maintenance consumes 4 hours per machine per week. The cell currently produces 1,840 parts per week at a 12.5-minute cycle and 12 hours of setup. The customer forecasts a 12% volume increase next quarter. Quick-change tooling costing $30,000 would cut setup to 6 hours per week; advanced inserts costing $45,000 would reduce cycle time by 8%. A Saturday overtime shift can add 8 hours on each machine at a 50% wage premium; loaded labor is $42 per hour. Outsourcing is available at $38 per part versus $24 internal variable cost. Finance will fund projects with payback under 12 months, and the plant has a no-layoff practice.
1. Calculate the cell's weekly capacity and the capacity gap after the 12% forecast. State your assumptions.
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Capacity = 5 machines × 2 shifts × 8 hours × 5 days = 400 hours. Less planned maintenance of 5 × 4 = 20 hours gives 380 available hours per week. Current load = 1,840 parts × 12.5 minutes / 60 = 383.3 run hours, plus 12 setup hours = 395.3 hours. The cell is already 15.3 hours over planned capacity and must be using overtime or expediting. Forecast demand = 1,840 × 1.12 = 2,061 parts. Run time = 2,061 × 12.5 / 60 = 429.4 hours; plus 12 setup hours = 441.4 hours. Capacity gap = 441.4 − 380 = 61.4 hours per week, equivalent to about 295 parts at 12.5 minutes each. Assumptions: no scrap, no additional downtime beyond planned maintenance, unchanged setup, and a stable quarterly demand level. If scrap is 2%, the gap grows by roughly 6 hours.
2. Evaluate the improvement and overtime/outsourcing options, and recommend a plan that meets demand with a buffer. Include payback.
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Quick-change tooling cuts setup from 12 to 6 hours, saving 6 hours. Inserts cut cycle time 8% to 11.5 minutes: run = 2,061 × 11.5 / 60 = 395.0 hours; plus 6 setup = 401.0 hours, leaving a 21.0-hour gap. A Saturday shift adds 5 × 8 = 40 hours at $42 × 1.5 = $63 per hour, or $2,520 per week, which covers the gap with 19 hours of buffer. Without improvements, the 61.4-hour gap requires 40 overtime hours plus 21.4 hours outsourced, about 103 parts at 12.5 minutes. Outsourcing premium = 103 × ($38 − $24) = $1,442 per week; overtime = $2,520, so the no-improvement incremental cost is about $3,962 per week. With improvements and only 21 overtime hours, cost is about 21 × $63 = $1,323 per week. Savings = $3,962 − $1,323 = $2,639 per week, or about $137,000 per year. Capex of $75,000 gives payback of about 6.6 months, well under the 12-month hurdle. Recommend both projects plus a partial Saturday shift, not a full shift, and protect the 19-hour buffer.
3. What risks or data would change your recommendation?
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Key risks: the forecast may not materialize; the inserts may not deliver 8% across all part families; overtime can cause fatigue and quality problems; outsourcing adds lead time and quality risk. Data needed before release: part-family mix, scrap and rework rates, actual setup variance, true OEE, and any customer penalty for late delivery. If demand falls below about 1,900 parts per week, defer the inserts and use overtime only, because the payback depends on volume. If demand exceeds about 2,200 parts per week, the 40-hour Saturday buffer is exhausted and the plant needs a sixth machine or a third shift, not more overtime. Also check whether the no-layoff practice limits redeployment of labor; schedule the overtime voluntarily and cross-train operators so the cell is not dependent on a few people.