Question
Part 1: Bottleneck (Constrained Resource) Decision The constraint at Crumedy Inc. is an expensive milling machine. The three products listed below use this constrained resource.
Part 1: Bottleneck (Constrained Resource) Decision
The constraint at Crumedy Inc. is an expensive milling machine. The three products listed below use this constrained resource. Required: Rank the products in order of their current profitability from the most profitable to the least profitable. In other words, rank the products in the order in which they should be emphasized. Show your work!
Part 2: Make or Buy Decision
A firms manager must decide whether to make or buy a certain item used in the production of vending machines. Cost and volume estimates are as follows:
Make Buy
Annual fixed cost $150,000 None
Variable cost per unit $60 $80
Annual volume (units) 12,000 12,000
The fixed cost relates to rent that would be incurred on facilities and equipment if the make option is chosen. This cost would not be incurred if the buy option is chosen.
Given these numbers, should the firm make or buy this item? Show your work.
\begin{tabular}{lrrr} & \multicolumn{1}{c}{ GV } & OP & \multicolumn{1}{c}{ FB } \\ Selling price per unit ... & $420.70 & $444.24 & $329.13 \\ Variable cost per unit .... & $345.80 & $349.20 & $246.98 \\ Time on the constraint (minutes) .. & 7.00 & 7.20 & 5.30 \end{tabular}
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started