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Production Mid-Term

Question 1:

Process Flow Diagram of CRU Rentals

Year 1996

Total number of units = 14,405
Utilization = 0.56 (56%)
Revenue rate = No. of units * rent = 8,000 x 30 = $240,000/wk Depreciation = 14,405 x ($1000/156wks) = $92,340/wk Contribution Margin = $126,870/wk
Variable Cost rate = 25 x 1,000 (R) + 25 x 1,000 (S) + 4x700x.85 + 150 x 405 = $113,130/wk

In 1997:

Number of units on rent = 8,000
Total number of units = 15,205
Utilization = 0.53 (53%)
Revenue = 4,800 x 30 + 3,200 x 35 = $256,000/wk
Contribution Margin = $97,618/wk
Depreciation = 15,205 x (1000/156) = $97,468/wk
Cost = 25 x 1,400 (R) + 25 x 1,400 (S) + 4x980 x .85 + 150 x 567 = $158,382/wk

After Change in Demand to 1400 units/week:

The evaluation parameters as calculated in the new scenario:

Number of units on rent = 8,000
Total number of units = 16,967
Utilization = 0.47 (47%)
Revenue = 4,800 x 30 + 3,200 x 35 = $256,000/wk
Contribution Margin= $97,618/wk
Depreciation = 16,967 x (1000/156) = $108,763/wk
Cost = 25 x 1,400 (R) + 25 x 1,400 (S) + 4 x 980x .85 + 150 x 567 = $158,382/wk

When there is no sales drive the demand would reduce to 600 units/week. In that situation, the following are the parameters:

Number of units on rent = 4,800
Total number of units = 8,643
Utilization = 0.56 (56%)
Revenue = 4,800 x 30 = $144,000/wk
Contribution Margin = $76,122/wk
Depreciation = 8,643 x (1000/156) = $55,404/wk
Cost = 25 x 600 (R) + 25 x 600 (S) + 4x420x .85 + 150 x 243 = $67,878/wk

Question 2:

a)The departments that would be found typically in such an organization in terms of the processes followed in the company are: 1. Water Treatment Department
2. Mixing Department
3. Carbonation Department
4. Washing Department
5. Filling Department
6. Labeling Department
7. Quality Control Department
8. Packaging Department
Water Treatment Department
Impurities, such as suspended particles, organic matter, and bacteria, may degrade taste and colour. They are generally removed through the traditional process of a series of coagulation, filtration, and chlorination. Coagulation involves mixing a gelatinous precipitate (ferric sulphate or aluminium sulphate), into the water. The gelatinous absorbs suspended particles, making them larger and more easily trapped by filters. During the clarification process, alkalinity must be adjusted with an addition of lime to reach the desired pH level. The water passes through a layer of sand and courser beds of gravel to capture the particles. Sterilization of water is then carried out to destroy bacteria and organic compounds that might spoil the water's taste or colour. The water is pumped into a storage tank and is free chlorinated. Mixing Department

The dissolved sugar and flavour concentrates are pumped into the dosing station in a predetermined sequence according to their compatibility. The ingredients are conveyed into batch tanks where they are carefully mixed; too much agitation can cause unwanted aeration. The syrup may be sterilized while in the tanks, involving quick heating and cooling the mixture. The water and syrup are carefully combined by sophisticated machines, called Proportioners, which regulate the flow rates and ratios of the liquids. The vessels are pressurized with carbon dioxide to prevent aeration of the mixture.

Carbonation Department
Carbonation is generally added to the finished product, though it may be mixed into the water at an earlier stage. The temperature of the liquid must be carefully controlled since carbon dioxide solubility increases as the liquid temperature decreases. Many carbonators are equipped with their own cooling systems. The amount of carbon dioxide...
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