This research paper examines production bottlenecks in a Room Air Conditioner (RAC) manufacturing line to establish the operation that restricts monthly production. The system level capacity analysis of the entire station showed that the Tube Processing Section which was in charge of expansion and reduction of the copper tubes was the bottleneck, whereas other stations had enough capacity. This section was analyzed in detail in terms of time study, Value Stream Mapping (VSM), SMED principles and capacity modelling. As of now, it is observed that the section needs 873.48 machine-hours per month whereas there is 572 hours which is insufficient leading to 301.48 hours deficit in machine capacity. Three scenarios of improvements were considered. Option A (SMED and optimization of operator) is a reduction in the amount of non-value-added time but is still inadequate with a need of 768.66 hours. Alternative bargain (a high throughput replacement machine) fulfills requirement when there should be at least 32 percent decrease in processing time and no die-change losses. The most robust proposal is option C (two parallel machines) which has 454.21 hours necessary. The feasibility analysis shows that structural capacity expansion to eliminate the bottleneck must be done by using either option B or C. The analysis offers a decision model that is tested and valid to improve the capacity and justify the investment decision that the company wants to make in new tube-processing devices.