Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A textile company produces shirts and pants. Each shirt requires two square yards of cloth, and each pair of pants requires three square yards of

A textile company produces shirts and pants. Each shirt requires two square yards of cloth, and each
pair of pants requires three square yards of cloth. During the next two months the following demands
for shirts and pants must be met (on time): month 1,1,200 shirts and 1,400 pairs of pants; month 2,
1,300 shirts and 1,500 pairs of pants. During each month the following resources are available: month
1,9,000 square yards of cloth; month 2,6,000 square yards of cloth. In addition, cloth that is available
during month 1 and is not used can be used during month 2. During each month it costs $8 to produce
an article of clothing with regular-time labor and $16 with overtime labor. During each month a total of
at most 2,500 articles of clothing can be produced with regular-time labor, and an unlimited number of
articles of clothing can be produced with overtime labor. At the end of each month, a holding cost of $3
per article of clothing is incurred.
a. Determine how to meet demands for the next two months (on time) at minimum cost. Assume that
100 shirts and 200 pairs of pants are already in inventory at the beginning of month 1. If your
answer is zero, enter "0".
Total cost:
b. Use a two-way SolverTable to investigate the effect on total cost of two simultaneous changes. The
first change is to allow the ratio of overtime to regular-time production cost (currently $16$8=2) to
decrease from 20% to 80% in increments of 20%, while keeping the regular time cost at $8. The
second change is to allow the production capacity each month (currently 2,500) to decrease by 10%
to 50% in increments of 10%. The idea here is that less regular-time capacity is available, but
overtime becomes relatively cheaper. Is the net effect on total cost positive or negative?
For low ratios of overtime to regular time production cost, as production capacity decreases, cost
For high ratios of overtime to regular time production cost, as production capacity decreases, cost
As the ratio of overtime to regular time production cost increases, cost decreases .
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing a business risk appraoch

Authors: larry e. rittenberg, bradley j. schwieger, karla m. johnston

6th Edition

9780324645095, 324645090, 978-0324375589

More Books

Students also viewed these Accounting questions

Question

Explain exothermic and endothermic reactions with examples

Answered: 1 week ago

Question

Write a short note on rancidity and corrosiveness.

Answered: 1 week ago