Cocper River Glass Works (CRGW) produoes four different modeis of desk lamps as

Question

Cocper River Glass Works (CRGW) produoes four different modeis of desk lamps as shown on the flowchart. The operations manager knows that total monthly demand exceeds the capacity available for production. Thus, she nterested in deter ing the pr duct mix which wil maxim e pro ts. Each models p ce, uting, process ng tr es and mate al cost is provided i the flowchart Demand next month est mated to be 275 units of model Alpha,150 units of model Bravo, 175 units of model Charlie, and 250 units of model Delta. CRGW aperates only one 8 hours shift per day and is scheduled to wark 20 days next manth (no wetime). Further each station requires a 10%capacity ashion. _Cckt icontoviow the Cooper River Glass Woks Flowchart. a. Which station is the bottieneck? The bottleneck isV with a total load of minutes for the next month. (Enter your response as a whole number) b. Using the tradtional method, which bases decisions sclely on a product's contribution to profits and overhead, what is the optimal product mix and what is the overall profitability? The product mix obtained using the tradtional method is as follows. (Enter your responses as whole numbers. If your answer has decimal places, round your response down to the next whole number) Product Apha Bravo Charlie Delta Units to be produced 150 275 This product mix yields a profit of $ 50,715. (Enter your response as a whole number) c. Using the bottleneck-based method, what is the optimal product mix and what is the overal proftability? The product mix obtained us te bo er eck method is as folows. Enter our esponses as whole numbers. your answer has decimal places, round your response down to the next hole number Units to be produced 175 207 150 275 Product Alpha Delta This product mi yields a profit of $ 57,380.(Enter your response as a whole number) Alpha Product: Alpha Station 1 Station 2 Price: $75/unit 10 min 15 min 10 min Demand: 275 units/month Raw materials Bravo Product Bravo + Price: $70/unit Demand: 150 units/month Raw materials Product Charlie Price $65/unit Demand: 175 units/month Raw materials Delta Product: Delta Station 1 Station 2 _+ Price, $90/unit Demand: 250 units/month

Explanation / Answer

(a)

First of note that the total 9600 minutes of available capacity will not be used. 10% cushion has to be kept. So, the available minutes are = 9600 x 90% = 8640

Bottleneck station is the station 3 with a load of 9000 minutes.

(b)

The traditional method is selecting the product mix only based on the overall contribution margin.

Priority sequence is thus Delta --> Alpha --> Bravo --> Charlie

So, the optimal mix is -

Expected profit = 275 x 65 + 150 x 60 + 103 x 57 + 250 x 85 = $53,996

(c)

Under the bottleneck approach, we will set the priority based on the contributon margin/ time spent in bottleneck station.

Priority sequence is thus Charlie --> Delta --> Bravo --> Alpha

So, the optimal mix is -

Expected profit = 251 x 65 + 150 x 60 + 175 x 57 + 250 x 85 = $56,540

Station Load from Alpha Load from Bravo Load from Charlie Load from Delta Total load
(min) Capacity considering cushion (min) 1 2750 0 875 5000 8625 8640 2 1375 3000 2625 1250 8250 8640 3 4125 1500 875 2500 9000 8640 4 2750 0 3500 2500 8750 8640

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