Please step by step solution King Supply makes four different types of plumbing
ID: 449052 • Letter: P
Question
Please step by step solution
King Supply makes four different types of plumbing fixtures: W, X, Y and Z. The contribution margins for these products are: $80 for Product W, $60 for Product X, $100 for Product Y and $120 for Product Z. Fixed overhead is estimated at $7,500 per week. The manufacture of each fixture requires four machines, Machines No.1, 2, 3 and 4. Each of the machines is available for 40 hours a week and there is no setup time required when shifting from the production of one product to any other. The processing requirements to make one unit of each product are shown in the table. Weekly product demand for the next planning period has been forecasted as follows: 80 Ws, 90 Xs, 60 Ys and 40 Zs. Which work center is the bottleneck operation? Which product should be scheduled first? What is the optimal product mix? What is the profit if the company manufactures the optimal product mix?Explanation / Answer
Answer-1 Machine -1 is the bottleneck operation. The reason being its total processing time is more than every othe rmachine. Machine processing time is 48 hours whereas other machines are taking less than 48 hours to process.
Answer-2 Here the profit per minute of the product Z is $120 which is maximum therefore it should be scheduled first.
Answer-3 and 4
Answer: W X Y Z contribution margin $80 $60 $100 $120 So as per the contribution margin the sequency is (highest to lowest): Z Y W X Total number of hours available = 40 hours = 40 x 60 minutes = 2400 minutes Work Center Minutes at the Start Minutes Left After Making 40 Z Minutes Left After Making 60 Y Can Only Make 35 W Can Only Make 25 X Machine-1 2400 1920 480 420 56 Machine-2 2400 2080 640 490 70 Machine-3 2400 1760 320 280 70 Machine-4 2400 1680 240 210 70