Giberson Glass Studio

Giberson’s Glass Studio

Giberson is a skilled glassblower facing financial difficulties in his business. His resources are draining out quickly due to the following reasons –
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Lack of proper bookkeeping following his divorce, since his wife used to take care of the activity
He has no knowledge which of his 4 items – glasses, paper weights, tumblers and vases – is profitable
He is in dire need of a better pricing strategy to maintain profits after accounting for costs and his wages

Looking at the available data, Giberson seems to be under-utilizing several of his resources, namely raw materials and time in addition to inefficiently pricing the products. Let us look at each of these factors separately.
 Raw Materials
Let us calculate the total weight of raw materials used to produce the 4 items and compare that with the total weight of raw materials available
Weight / piece
(lbs)
Patterned glasses
0.5
Paperwights
0.9
Wrapped tumblers
0.5
Vases
0.6
Item

Weekly
Production
19
10
32
8

Total Weight
(lbs)
9.5
9
16
4.8
39.3

The total weight of raw material used = 39.3 lbs.
The total weight of raw material scrapped = 50 lbs.
Batch size available = 200 lbs.
Percentage utilization = (39.3 + 50)/200 = 45%
Cost/ batch = $21.42.
Cost/year = $21.42*40 = $856.80
Recommendation – Giberson is reluctant to reduce the quantity of the batch to preserve quality. If he can half the quantity while still preserving the proportion of ingredients, he can save $428.40 per year
 Time
Let us calculate the amount of hot production time required to produce the 4 items and compare that to the total hot time available
Item
Patterned glasses
Paperwights
Wrapped tumblers
Vases

Weekly
Production
19
10
32
8

Hot Time/Item Weekly Hot Time
(mins)
(mins)
15
285
15
150
15
480
25
200
1115

Hot time needed for the 4 items = 1115 minutes = 1115/60 = 18.58 hours.
Hot time available = 5*6 = 30 hours (Giberson blew glass Tuesday through Saturday)
Percentage utilization = 18.58/30 = 62%
Hot time