a company makes four products that have the following characteristics product a.

Question

a company makes four products that have the following characteristics product a. sells for 50$ but neeeds $10 of materials and $15 of labor to produce see below for more details please show all work with the Below numerics A company makes four products that have the following characteristics: Product A sells for $50 but needs $10 of materials and $15 of labor to produce; Product B sells for $75 but needs $30 of materials and $15 of labor to produce; Product C sells for $100 but needs $50 of materials and $30 of labor to produce; Product D sells for $150 but needs $75 of materials and $40 of labor to produce. The processing requirements for each product on each of the four machines are shown in the table. Work centers W. X. Y, and Z are available for 40 hours per week and have no setup time when switching between products. Market demand for each product is 80 units per week. Using the bottleneck method, in what sequence should products be scheduled for production? The bottleneck method refers to maximizing the contribution margin per minute at the bottleneck for each product. Processing Time (min/unit) Work Center 6 12 5 11 9 10 Select one: Ca. B.D.CA b. C,D,BA c. A,B,D,C d. D.B.A,C

Explanation / Answer

Contribution margins

A = 50-10-15 = 25

B = 75-30-15 = 30

C = 100-50-30 =20

D = 150-75-40 =35

Time taken to produce 1 unit

A= 29

B= 17

C= 25

D=40

Contribution margin per unit of time

A= 25/29 =0.862

B=30/17 =1.76

C= 20/25 =0.8

D=35/40 =0.875

Bottleneck for process A is at Z. contribution per unit time at Z = 0.86x10 =8.6

Bottleneck of process B is at X. Contribution per unit time at X = 1.76x7 =12.32

Bottleneck of process C is at Y. Contribution per unit time at Y =0.8x11 =8.8

Bottleneck of process D is at W . Contribution per unit time at W = 0.875x12 = 10.5

The sequence should be such as the contribution at the bottleneck is the maximum. It is BDCA.

Hence option a is correct.

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