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Bankruptcy (R) Bob Wilcox had just been assigned the new job of production manager - games and toys for the Exemplar Manufacturing Co. Previously, Bob had worked as a foreman in another division of Exemplar for seven years. Exemplar had several well-established product lines and was beginning to diversify into new areas. Bob's superior, the general production manager, asked him to work with the new products manager on the latest product, code-named Bankruptcy, Bankruptcy was a new adult game that marketing seemed to think would be an immense success, competing with board games such as Diplomacy and Monopoly. Bob would be responsible for designing and controlling the manufacture of Bankruptcy. An Exemplar staff member, John Duncan, informed Bob that the basic tasks to be performed were assembling components purchased from other manufacturers. In repeated attempts John was able to assemble completed versions of Bankruptcy in fil- teen minutes. He also found that if three workers performed only two assembly opera- tions each, instead of all six, each operation could be completed in half the time shown below. Thus, while one person working alone could produce thirty-two games a day, a team of three people working together could produce 192 games of Bankruptcy per day. The assembly operations could be performed in any order. The time required and material costs of the various components for each operation were given to Bob as follows: Assembly Operation Material Cost A B C D E F Time Required For One Person For a Three- Working Alone Person Team I minute minute 4 minutes 2 minutes 2 minutes 1 minute 2 minutes I minute 3 minutes 1% minutes 3 minutes 1% minutes 15 minutes 7 minutes S .50 1.25 .25 .50 2.50 5.00 $10.00 All materials could usually be obtained within one week of being ordered. On occa- sion, materials could take up to two weeks to be delivered. The vice-president of finance recently had sent around a memo to managers asking that all inventories be kept at minimum sizes hice costs for the company had risen substantially. He asked to be informed of all investment needs exceeding $10000. A good supply of semiskilled personnel was available in the community. The starting rate at Exemplar was $3 per hour (including benefits): normal hours were 0730 to 1600, with thirty minutes for lunch. Thus, cach worker was paid an average of S24 360 Bankruptcy (R)/361 per day. Considering that on average there were twenty working days in a month, this worked out to $480 per month. Bob was told he could hire as many workers as he thought he needed and pay them on whatever basis he wished so long as he did not exceed the plant average of $4.50 per hour regular time for semiskilled labour. Over- time, if used, was calculated at time and a half. Bob was allotted space in the plant of 20 m x 5 m and told he could arrange his operations as he saw fit. The department would be charged $24/m2 per year for the entire space allotted. Additional space required beyond the 100 m2 was also available, but would be charged to his operation at $36 per square metre per year. The raw materials inventory (at $10 per unit) and finished goods inventory (valued at material cost plus labour cost) required roughly the same amount of cubic space. As the boxes were fairly bulky, he could store the equivalent of sixty units of Bankruptcy on each square metre of foor space, assuming he piled them as high as possible. John Duncan told Bob he figured they would need 50 m2 for assembly operations including tables, work stations, lockers, etc. Other fixed manufacturing overhead costs associated with Bankruptcy were estimated to be $2060 per month. The new products manager told Bob that the marketing department forecasted a demand of 3600 units per month for at least the first year. This could vary from 3000 to 4000 in any given month. He also stressed that as Bankrupicy was basically an impulse purchase, stock-outs were considered very costly and said he would be after Bob to avoid such situations. The intended selling price was $12 per unit. Marketing fixed costs (mostly for packaging design, advertising, and point of purchase displays) were estimated at $20000. Bob was also told that one of his suppliers, Hutchison Ltd., had sent in a quota- tion of Sil per completed unit to produce the year's requirements of Bankrupter for Exemplar. Their quality was not considered as good as Exemplar's, but they said they were prepared to provide units on any schedule desired. Unfortunately, they added, the delivery time could vary from one to four wecks depending on how busy they were. Bankruptcy (R) Bob Wilcox had just been assigned the new job of production manager - games and toys for the Exemplar Manufacturing Co. Previously, Bob had worked as a foreman in another division of Exemplar for seven years. Exemplar had several well-established product lines and was beginning to diversify into new areas. Bob's superior, the general production manager, asked him to work with the new products manager on the latest product, code-named Bankruptcy, Bankruptcy was a new adult game that marketing seemed to think would be an immense success, competing with board games such as Diplomacy and Monopoly. Bob would be responsible for designing and controlling the manufacture of Bankruptcy. An Exemplar staff member, John Duncan, informed Bob that the basic tasks to be performed were assembling components purchased from other manufacturers. In repeated attempts John was able to assemble completed versions of Bankruptcy in fil- teen minutes. He also found that if three workers performed only two assembly opera- tions each, instead of all six, each operation could be completed in half the time shown below. Thus, while one person working alone could produce thirty-two games a day, a team of three people working together could produce 192 games of Bankruptcy per day. The assembly operations could be performed in any order. The time required and material costs of the various components for each operation were given to Bob as follows: Assembly Operation Material Cost A B C D E F Time Required For One Person For a Three- Working Alone Person Team I minute minute 4 minutes 2 minutes 2 minutes 1 minute 2 minutes I minute 3 minutes 1% minutes 3 minutes 1% minutes 15 minutes 7 minutes S .50 1.25 .25 .50 2.50 5.00 $10.00 All materials could usually be obtained within one week of being ordered. On occa- sion, materials could take up to two weeks to be delivered. The vice-president of finance recently had sent around a memo to managers asking that all inventories be kept at minimum sizes hice costs for the company had risen substantially. He asked to be informed of all investment needs exceeding $10000. A good supply of semiskilled personnel was available in the community. The starting rate at Exemplar was $3 per hour (including benefits): normal hours were 0730 to 1600, with thirty minutes for lunch. Thus, cach worker was paid an average of S24 360 Bankruptcy (R)/361 per day. Considering that on average there were twenty working days in a month, this worked out to $480 per month. Bob was told he could hire as many workers as he thought he needed and pay them on whatever basis he wished so long as he did not exceed the plant average of $4.50 per hour regular time for semiskilled labour. Over- time, if used, was calculated at time and a half. Bob was allotted space in the plant of 20 m x 5 m and told he could arrange his operations as he saw fit. The department would be charged $24/m2 per year for the entire space allotted. Additional space required beyond the 100 m2 was also available, but would be charged to his operation at $36 per square metre per year. The raw materials inventory (at $10 per unit) and finished goods inventory (valued at material cost plus labour cost) required roughly the same amount of cubic space. As the boxes were fairly bulky, he could store the equivalent of sixty units of Bankruptcy on each square metre of foor space, assuming he piled them as high as possible. John Duncan told Bob he figured they would need 50 m2 for assembly operations including tables, work stations, lockers, etc. Other fixed manufacturing overhead costs associated with Bankruptcy were estimated to be $2060 per month. The new products manager told Bob that the marketing department forecasted a demand of 3600 units per month for at least the first year. This could vary from 3000 to 4000 in any given month. He also stressed that as Bankrupicy was basically an impulse purchase, stock-outs were considered very costly and said he would be after Bob to avoid such situations. The intended selling price was $12 per unit. Marketing fixed costs (mostly for packaging design, advertising, and point of purchase displays) were estimated at $20000. Bob was also told that one of his suppliers, Hutchison Ltd., had sent in a quota- tion of Sil per completed unit to produce the year's requirements of Bankrupter for Exemplar. Their quality was not considered as good as Exemplar's, but they said they were prepared to provide units on any schedule desired. Unfortunately, they added, the delivery time could vary from one to four wecks depending on how busy they were