3. The typical monthly production mix at Bangor Industries is as follows:

Each deluxe model typically requires 5 hours of labor and 10 hours of machine time. Each regular model takes 4 hours of labor and 8 hours of machine time. Finally, the economy model needs, on average, 3.5 hours of labor and 6 hours of machine time.

a. (**) What should the weighted per-unit planning values be for labor? For machine time? What assumptions must be made in order to use these values?

b. (**) Suppose for the next month the mix is expected to change to 30% deluxe, 30% regular, and 40%
economy models. How would this affect the planning values?

c. (**) When the product mix changes from month to month, should Bangor Industries use a top-down or a bottom-up approach to sales and operations planning?
Explain.

Transcribed Image Text:

Deluxe models 45% Regular models 30% Economy models 25%