Question
Surfing Products produces two surfboards, Standard and Superfast. Standard surfboards have a unit contribution margin of $128, and Superfast surfboards have a unit contribution margin
Surfing Products produces two surfboards, Standard and Superfast. Standard surfboards have a unit contribution margin of $128, and Superfast surfboards have a unit contribution margin of $720. The demand for maximum demand Standards is 80 per month, and the maximum demand for Superfast surfboards is 65 per month. Management desires a product mix that will maximise the contribution toward fixed costs and profits. Direct manufacturing labour is limited to 2,720 hours a month, epoxy curing ovens are limited to 360 hrs a month and machine-hours are limited to 1,400 a month. The Standard surfboards require 20 hours of labour, 3 hours in the curing ovens and 8 machine-hours. Superfast surfboards require 34 labour-hours, 8 hours in the curing ovens and 20 machine-hours. Let R represent Standard surfboards and S represent Superfast surfboards. Figure 1 The graphical summary of the relationships is provided to assist you identify which of the binding constraints to use in your answer (the data values and labels have been purposely omitted). Required: i. What is the Theory of Constraints? Describe briefly. (2 Marks - Suggested time 9 minutes) ii. Using the data provided above, formulate the objective function and constraints necessary to determine the optimal product mix. (1 Mark - Suggested time 4 minutes) iii. Using the Linear Programming technique (i.e. simultaneous equations) with the data provided above, calculate the optimal number of each product that the company should make and sell each month. (3 Marks - Suggested time 8 minutes) iv. Describe how the "Drum-Buffer-Rope" System can be used to improve production performance, in particular production throughput. Illustrate your answer using the information provided above and your answers to the previous parts to this question. Include in your answer, identification of which of the binding constraints that should be elevated next, and provide justification for your choice. (2 Marks - Suggested time 9 minutes)
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