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Section B (40 marks) Answer one question (c) DP plc now realises that there may be a limit on the number of packaging hours



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Section B (40 marks) Answer one question (c) DP plc now realises that there may be a limit on the number of packaging hours available. A computer package for linear programming has been used and the following solution determined: Variables Y Constraints Question 1 DP plc assembles computers from bought-in components, using a computer controlled robotic assembly line. The assembled computers are then tested by highly qualified computer engineers before they are packaged for despatch to customers. DP plc currently assembles two different types of computer from different combinations of the same components. The following budgeted details relate to the computers: S1 S2 S3 S4 S5 268.75 112.50 23,875.00 1.46 4.75 31.25 687.50 107,437.50 Selling price/unit Component costs per unit Computer X 800 150 Computer Y 1,200 310 Minutes per unit Minutes per unit Assembly time (S1) 80 130 Testing time (S2) Packaging time (S3) 120 60 180 30 The following costs are derived from DP plc's budget for the year to 31 December 2018 Assembly Testing Packaging 180/hour 60/hour 20/hour No cost increase are expected until July 2019. DP plc is now preparing its detailed plans for the six-month period to 30 June 2019. During this period, it expects that the assembly time available will be limited to 1,000 hours and the testing time available will be limited to 875 hours. The packaging is carried out by part-time workers, and the company believes that there are a number of local residents who would be pleased to undertake this work if the existing packaging staff were unable to complete the level of activity needed. The maximum levels of demand for each computer will be: 300 units of X (S4) 800 units of Y (S5) Contribution Write a report to the management team that interprets the solution produced by the computer package and makes appropriate recommendations. (Note: Do not formulate, or explain the basis of, the computer model.) (10 marks) (d) At the management meeting that discussed the report you produced in Question (c) above, the senior computer engineer responsible for the testing of the computers was surprised at the times per unit being used in your calculations. 'It seems to me', she said, 'that you have used the testing times per unit that were set as the targets when those models of computer were first assembled. We seem to test them much more quickly than this now.' Explain how the learning effect referred to by the senior computer engineer will affect the calculation of the optimum product mix. Use a 90 per cent learning curve to illustrate your answer but do not determine a revised product mix. (Note: The formula for a 90 per cent learning curve is y = ax-0.1520.) (8 marks) (e) Comment on factors likely to affect the accuracy of the analysis of costs into fixed and variable components. (8 marks) Required: (a) Calculate the contribution per unit for each type of computer. (6 marks) (b) Determine the mix of computers that will maximise DP plc's profits for the six months ending 30 June 2019, using an appropriate linear programming solution, and calculate the contribution that will be earned. (8 marks) (Total 40 marks)

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