43) Louis Pyth on makes and sells two bags (Backpack and Messe nger Bag) that ar

Question

43) Louis Pyth on makes and sells two bags (Backpack and Messe nger Bag) that are assembled in three workstations using small bat ch process. Batch setup times are neglegible. Each workstation is staffed by a worker and paid o per hour. The plant operates 40 hours a week with overhead costs of $2,000 per week. a. Which of the three workstations x, Y, or Z serves as the bottleneck for Louis Python? b. Calculate the optimal product mix quantity using, bottleneck method c. Calculate the profitability. Backpack Step 1 at Workstation Z (30 min) Step 2 at workstation Y (15 min) Fnish with Step 3 at workstation x (15 min) Product : Backpack Price $81/ unit Demand :50 unitsink S9 - Raw Materials S6 Purchased Part Messenger Bag Product : Messenger Bag Finish with Step 3 at workstationY (20 min) Step 2 at Price Demand : 60 units/ uk .:$80 unt Step 1 at $4 Workstation Z (10 min) + workstation X (30 min) Raw Materials $6 Purchased Part

Explanation / Answer

a) Work load of a station = processing time of Backpack * demand rate of backpack + processing time of Messenger bag * demand rate of messenger bag

Workload of station X = 15*50 + 30*60 = 2550 minutes

Workload of station Y = 15*50 + 20*60 = 1950 minutes

Workload of station Z = 30*50 + 10*60 = 2100 minutes

Maximum workoad is at station X , therefore bottleneck station is X

b) Optimal product mix using bottleneck is caculated by scheduling maximum quantity of item with least processing time on bottleneck station. Backpack takes least time , therefore 50 units of backpack are scheduled. Remaining time = (2400 minutes available per week - 15*50)/30 = 55 units.

Optimal product mix = 50 backpacks and 55 messenger bags

c) Profit = 50*(81-9-6) + 55*(80-4-6) - 3*40*16 - 2000 = $ 3230

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