Donner Case Write-Up

The first issue to be discussed is the use of Donner’s current CNC drill and router. Presently, Donner runs only orders that are above 100 boards on the CNC drill, and all other orders on manual drills. . As such, an average of ~12 orders rerun on this machine each month, with the remaining orders being completed by hand. While the setup time for the machine is greater than the prep time required for the modified drill presses, Donner is largely underutilizing this equipment. To determine the smallest order quantity for the CNC drill, we solve the following equation (let “x” represent the number of boards per order):

Manual setup time + (average minutes/hole drilled * number of holes/board) * number of boards per order = CNC setup time + (average minutes/hole drilled * number of holes/board) * number of boards per order

15 + (0.8*500) * x = 240 + (0.004*500) * x

This calculation gives us the quantity of boards per order that would allow us to break even on the time required to complete the job on the manual drill press versus the CNC drill. The result, then, is x = 5.9. Since we cannot complete a portion of a board, any order over six boards should be run on the CNC drill, and all smaller orders should be done on the manual drill press.

For the CNC router, we can take a similar approach to determine the order size that will allow us to break even.

Manual setup time + (average minutes/board) * number of boards per order = CNC setup time + (average minutes/board) * number of boards per order

= 50 + (1) * x = 150 + (0.5) * x

The result here, then, is x = 200, so any order below 200 boards should be finished manually. All orders over 200 boards should be sent to the CNC router for completion, to minimize time required for task completion.

By moving all orders over six boards onto the CNC drill, Donner will not only maximize efficiency through reduced cycle time required, but also will save on labor costs by freeing up employees that were previously required to operate the manual drill presses. Currently, Donner’s labor costs for prepping and drilling orders is $12,683.75. Once this change in process is implemented, though, Donner will experience savings of ~$6,330.50 per month in labor costs, as noted in the following calculations:

Donner Company Current Process:

Manual drill, 51 Orders, 936 boards: 51 orders*15 minutes prep time + 936 boards*40 minutes drilling per board = 38,205 minutes/ 60 minutes per hour = 636.75 hours * $15 per hour = $9,551.25

CNC drill, 9 orders, 4825 boards: 9 orders*240 minutes per order = 2160 minutes prep/ 60 minutes per hour = 36 hours * $20 per hour = $720

4,825 boards*2 minutes drilling