Bountiful Manufacturing produces two types of bike frames (Frame X and Frame Y). Frame X passes through four processes: cutting, welding, polishing, and painting. Frame Y uses three of the same processes: cutting, welding, and painting. Each of the four processes employs 10 workers who work eight hours each day. Frame X sells for $40 per unit, and Frame Y sells for $55 per unit. Materials are the only unit-level variable expense. The materials cost for Frame X is $20 per unit, and the materials cost for Frame Y is $25 per unit. Bountiful€™s accounting system has provided the following additional information about its operations and products:

Bountiful’s management has determined that any production interruptions can be corrected within two days.

Required:

1. Assuming that Bountiful can meet daily market demand, compute the potential daily profit. Now, compute the minutes needed for each process to meet the daily market demand. Can Bountiful meet daily market demand? If not, where is the bottleneck? Can you derive an optimal mix without using a graphical solution? If so, explain how.

2. Identify the objective function and the constraints. Then, graph the constraints facing Bountiful. Determine the optimal mix and the maximum daily contribution margin (throughput).

3. Explain how a drum-buffer-rope system would work for Bountiful.

4. Suppose that the Engineering Department has proposed a process design change that will increase the polishing time for Frame X from 15 to 23 minutes per unit and decrease the welding time from 15 minutes to 10 minutes per unit (for Frame X). The cost of process redesign would be $10,000. Evaluate this proposed change. What step in the TOC process does this proposal represent? 

Transcribed Image Text:

Frame X Resource Usage per Unit 5 minutes 15 minutes 15 minutes 10 minutes Frame Y Resource Usage per Unit 10 minutes 30 minutes Resource Name Cutting labor Welding labor Polishing labor Painting labor Market demand: Resource Available 4,800 minutes 4,800 minutes 4,800 minutes 4,800 minutes 15 minutes 200 per day 100 per day Frame A One unit Frame Y One unit