High Point Furniture manufactures a high-quality dining table, which is offered

Question

High Point Furniture manufactures a high-quality dining table, which is offered in both oak and walnut. The demand for the tables is 800 units for the oak table and 1500 for the walnut table. The tables are priced at $495 and $995 for the oak and walnut tables, respectively. The materials cost is $210 for the oak table and $430 for the walnut table. In addition, High Point has the following manufacturing information for the four manufacturing processes (receiving, preparation, assembly, and finishing), showing the amount of time (in minutes) required for each table for each process, and the total minutes of time available for each process.

Required:

1. Which process(es), if any, are constraints for the current level of demand?

2. Determine through-put margin for the constrained resource.

3. Compute throughput margin per constrained resource.

4. Prioritize productive capacity based upon how many oak or walnut tables can be manufactured.

Time Required/unit Time Name Oak Walnut Available Receiving 25 50 100,000 Preparation 80 120 250,000 Assembly 100 250 400,000 Finishing 60 40 120,000

Explanation / Answer

1) a) Time required for Receiving Process = (800 units*25 minutes)+(1,500 units*50 minutes) = 95,000 minutes

Time available for Receiving Process = 100,000, therefore this resource is not constraint.

b)Time required for Preparation Process = (800 units*80 minutes)+(1,500 units*120 minutes) = 244,000 minutes

Time available for Preparation Process = 250,000, therefore this resource is also not constraint.

c)Time required for Assembly Process = (800 units*100 minutes)+(1,500 units*250 minutes) = 455,000 minutes

Time available for Assembly Process = 400,000, therefore this resource is constraint.

d) Time required for Finishing Process = (800 units*60 minutes)+(1,500 units*40 minutes) = 108,000 minutes

Time available for Finishing Process = 120,000, therefore this resource is also not constraint.

Thus only Assembly Resource is a constraint for the current level of demand.

2) Calculation of through put margin for the constrained resource

3) Calculation of Through put margin per Constrained Resource (Assembly resource)

4) As the through put margin per unit of Assembly resource is higher for Oak Table, the production of Oak table should be prioritized.

Time allocated to Oak table = 800 units*100 minutes = 80,000

Remaning time for Walnut Table = 400,000-80,000 = 320,000

Possible units of Walnut Table = 320,000/250 = 1,280 units

Therefore 800 units of Oak table and 1,280 units of walnut table can be manufactured

Particulars Oak Table Walnut Table Sale Price $495 $995 Less: Material Cost ($210) ($430) Throughput Margin $285 $565

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