Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The senior management at ABC would like to determine if it is possible to improve firm profitability by changing their existing product mix. Currently, the

image text in transcribedimage text in transcribed The senior management at ABC would like to determine if it is possible to improve firm profitability by changing their existing product mix. Currently, the product mix is determined by giving resource priority to the highest contribution margin watercraft. Detailed production information is provided below. Please select a different integer value for each highlighted table entry from the given intervals. Before solving the question, copy the filled in table into your answer sheet. Otherwise, your solution cannot be evaluated. The company can make and sell up to the limit of its demand per week. The senior management wants to improve profitability by accepting the right set of orders, and so collected some additional financial data. - Overhead costs are SV per day. (Please select an integer value for SV from the interval [250; 500] and copy it in your solution sheet. Otherwise, your solution cannot be evaluated.) - The plant operates one 8-hour shift per day and 5 days per week. - One worker is assigned to each workstation. Thus, there are 5 workers at the company. Currently, decisions are made using the traditional method, which is to accept as much of the highest contribution margin product as possible (up to the limit of its demand), followed by the next highest contribution margin product, and so on until no more capacity is available. The newly hired production supervisor, is knowledgeable about the theory of constraints and bottleneck-based scheduling. He believes that profitability can indeed be improved if bottleneck resources were exploited to determine the product mix. a) Draw the flowchart of the manufacturing process. b) Find the bottleneck workstation(s). c) Assume that, labor cost is a fixed expense and each worker is paid \$W/week for an entire week, regardless of how much worker hours are used. . (Please select an integer value for \$W from the interval [500;1000] and copy it in your solution sheet. Otherwise, your solution cannot be evaluated.)Answer the following questions based on this information, such that there are no bottleneck workstations in the manufacturing company: i. What is the best weekly product mix and highest weekly profit, based on traditional approach? ii. What is the best weekly product mix and highest weekly profit, based on bottleneck-based approach? iii. Discuss the change in weekly profit. d) Now assume that, labor cost is a variable cost and each worker is paid SL/hour, depending on the production volume. . (Please select an integer value for \$L from the interval [10;20] and copy it in your solution sheet. Otherwise, your solution cannot be evaluated.)Answer the following questions based on this information, such that there are no bottleneck workstations in the manufacturing company: i. What is the best weekly product mix and highest weekly profit, based on traditional approach? ii. What is the best weekly product mix and highest weekly profit, based on bottleneck-based approach? iii. Discuss the change in weekly profit

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

The Power Of Laws

Authors: Terence K Moloisane

1st Edition

B08Z7HTFTJ, B0CP2YDQDK

More Books

Students also viewed these General Management questions