Case Study Mexicana Wire Works spection, good product is packaged and seel sepa-

ID: 396519 • Letter: C

Question

Case Study Mexicana Wire Works spection, good product is packaged and seel sepa- packaging. After in cana Wire Winding. Inc. He had not yet devel- to finished product storage; defective product is stored cal knowledge about the manufacturing pro- rately until it can be reworked. Ron Garcia felt good about his first week as a management trainee at Mexi oped any techni cess, but he had toured the entire facility, located in the suburbs On March 8, Vivian Espania, Mexicana's general manager and asked him to attend a staff meet. of Mexico City, and had met many people in various areas of the operation. stopped by Garcia's office ing at 1:00 P.M. Mexicana, a subsidiary of Westover Wire Works, a Texas Let's get started with the business at hand," Vivian firm, is a medium-sized producer of wire windings used in mak opening the meeting. "You all have met Ron Garcia, our new ing electrical transformers. José Arroyo, the production controlmanagement trainee. Ron studied operations management in his manager, described the windings to Garcia as being of stan- MBA program in southern California, so I think he is competent dardized design. Garcia's tour of the plant, laid out by process to help us with a problem we have been discussing for a long ype (see Figure 7.20), followed the manufacturing sequence time without resolution. I'm sure that each of you on my staff for the windings: drawing, extrusion, winding, inspection, and will give Ron your full cooperation.

Explanation / Answer

250 units of W0033C

600 units of W0007X.

ANALYSIS

Product W00075C= X1

W0033C= X2

W0005X= X3

W0007X= X4

MAXIMIZE

34X1 + 30X2 + 60X3 + 25X4

VIVIAN HAS GIVEN HER WORD THAT WILL MANUFACTURED 600 UNITS OF PRODUCT W0007X AND 150 UNITS OF PRODUCT W0075C

X1 > 150

X4> 600

PLANT CAPACITY

X1 + 2X2 + X4 4,000

X1 + X2 +4X3 + X4 4,200

X1 + 3X2 2,000

X1 +3X3 + 2X4 2,300

WORK ORDERS

X1 1,400

X2 250

X3 1,510

X4 1,116

PROFIT

PRODUCT

MATERIAL

LABOR

OVERHEAD

COST

SELLING PRICE

PROFIT

W0075C

$33.00

$9.90

$23.10

$66.00

$100.00

$34.00

W0033C

$25.00

$7.50

$17.50

$50.00

$80.00

$30.00

W0005X

$35.00

$10.50

$24.50

$70.00

$130.00

$60.00

W0007X

$75.00

$11.25

$63.75

$150.00

$175.00

$25.00

It is better for the company not to increase the number of employee in the drawing department in order to keep the cost down. By adding more headcounts in the drawing department, it is going to reduce the labor time yet it increases the labor cost up to 32%.