Chapter 7 Tif

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Table 7.5
A company makes four products that have the following characteristics: Product A sells for $50 but needs $10 of materials and $15 of labor to produce; Product B sells for $75 but needs $30 of materials and $15 of labor to produce; Product C sells for $100 but needs $50 of materials and $30 of labor to produce; Product D sells for $150 but needs $75 of materials and $40 of labor to produce. The processing requirements for each product on each of the four machines are shown in the table. | Processing Time (min/unit)|

Work Center| A| B| C| D|
W| 6| 1| 3| 12|
X| 9| 10| 4| 8|
Y| 4| 3| 12| 9|
Z| 10| 0| 7| 11|

Work centers W, X, Y, and Z are available for 40 hours per week and have no setup time when switching between products. Market demand for each product is 80 units per week. In the questions that follow, the traditional method refers to maximizing the contribution margin per unit for each product, and the bottleneck method refers to maximizing the contribution margin per minute at the bottleneck for each product. Table 7.5

A company makes four products that have the following characteristics: Product A sells for $50 but needs $10 of materials and $15 of labor to produce; Product B sells for $75 but needs $30 of materials and $15 of labor to produce; Product C sells for $100 but needs $50 of materials and $30 of labor to produce; Product D sells for $150 but needs $75 of materials and $40 of labor to produce. The processing requirements for each product on each of the four machines are shown in the table. | Processing Time (min/unit)|

Work Center| A| B| C| D|
W| 6| 1| 3| 12|
X| 9| 10| 4| 8|
Y| 4| 3| 12| 9|
Z| 10| 0| 7| 11|

Work centers W, X, Y, and Z are available for 40 hours per week and have no setup time when switching between products. Market demand for each product is 80 units per week. In the questions that follow, the traditional method refers to maximizing the contribution margin per unit for each product, and the bottleneck method refers to maximizing the contribution margin per minute at the bottleneck for each product.

37. Use the information in Table 7.5. Which work center is of greatest concern to the operations manager? Work center X

38. Use the information in Table 7.5. Using the traditional method, which product should be scheduled first? Product D

39. Use the information in Table 7.5. Using the traditional method, in what sequence should products be scheduled for production? D, B, A, C

40. Use the information in Table 7.5. Using the traditional method, what is the optimal product mix (consider variable costs only—overhead is not included in this profit calculation)? 80A, 80B, 60C, 80D

41. Use the information in Table 7.5. Using the traditional method, what is the profit if the company manufactures the optimal product mix (consider variable costs only—overhead is not included in this profit calculation)? Greater than $8,300 but less than or equal to $8,500

42. Use the information in Table 7.5. Using the bottleneck method, which product should be scheduled first? Product C

43. Use the information in Table 7.5. Using the bottleneck method, in what sequence should products be scheduled for production? C, D, B, A
44. Use the information in Table 7.5. Using the bottleneck method, what is the optimal product mix (consider variable costs only—overhead is not included in this profit calculation)? 71 A, 80B, 80C, 80 D

45. Use the information in Table 7.5. Using the bottleneck method, what is the profit if the company manufactures the optimal product mix (consider variable costs only—overhead is not included in this profit calculation)? Greater than $8,500

Table 7.6
Burdell Industries makes four different models of computer printers: the E-1000, the S-2000, the P-2000 and the N-1000. The...
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