Arethas Bicycle Company (ABC) has the hottest new product on the upscale toy marketboys and girls bikes
Question:
Aretha’s Bicycle Company (ABC) has the hottest new product on the upscale toy market—boys’ and girls’ bikes in bright fashion colors, with oversize hubs and axles; shell design safety tires; strong padded frames; chrome-plated chains, brackets, and valves; and non-slip handlebars. Due to the seller’s market for high-quality toys for the newest baby boomers, ABC can sell all the bicycles it manufactures at the following prices: boys’ bikes, $220; girls’ bikes, $175. This is the price payable to ABC at its Orlando plant. The firm’s accountant, V. R. Dondeti, has determined that direct labor costs will be 45% of the price that ABC receives for the boys’ model and 40% of the price received for the girls’ model. Production costs, other than labor but excluding painting and packaging, are $44 per boys’ bicycle and $30 per girls’ bicycle. Painting and packaging are $20 per bike, regardless of model. The Orlando plant’s overall production capacity is 390 bicycles per day. Each boys’ bike requires 2.5 labor-hours, each girls’ model 2.4 labor-hours. ABC currently employs 120 workers, each of whom puts in an 8-hour day. The firm has no desire to hire or fire to affect labor availability, for it believes its stable workforce is one of its biggest assets. Using a graphic approach, determine the best product mix for ABC.
Step by Step Answer:
Operations Management Sustainability And Supply Chain Management
ISBN: 9780137476442
14th Edition
Authors: Jay Heizer, Barry Render, Chuck Munson