Capacity and product mix decision Chang Company makes two types of L0 1,2 wood doors: standard and deluxe. The doors are manufactured in a plant con¬ sisting of three departments: cutting, assembly, and finishing. Both labor and machine time are spent on the two products as they are worked on in each department.

In planning the production schedule for the next month, management is confronted with the fact that there is a labor shortage, and some machines must be shut down for major maintenance and repair. The following information per¬ tains to the estimated levels of capacity of direct labor hours and machine hours available next month in the three departments:

REQUIRED

(a) Determine whether the direct labor hour and machine-hour capacities are adequate to meet the next month's demand.

(b) How many units of each product should the company produce to maximize its profits?

(c) Suggest alternatives the company might consider to satisfy all its customers' demands.(LO 2, 3)

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DEPARTMENT Capacity Available Cutting Assembly Finishing Machine hours 40,000 40,000 15,000 Labor hours 8,000 17,500 8,000 Direct labor and machine hours required per unit of each product are as fol- lows: Product Hours Standard: Direct labor hours Machine hours Deluxe: Direct labor hours Machine hours DEPARTMENTS Cutting Assembly Finishing 0.5 1 0.5 2 2 1 13 1.5 0.5 3 1.5