Roedel Electronics produces a variety of electrical components, including a remo

Question

Roedel Electronics produces a variety of electrical components, including a remote control for televisions and a remote control for DVD players. Each remote control consists of three subassemblies that are manufactured by Roedel: a base, a cartridge, and a keypad. Both remote controls use the same base subassembly, but different cartridge and keypad subassemblies.

Roedel's sales forecast indicates that 7000 TV remote controls and 5000 DVD remote controls will be needed to satisfy demand during the upcoming Christmas season. Because only 500 hours of in-house manufacturing time are available, Roedel is considering purchasing some, or all, of the subassemblies from outside suppliers. If Roedel manufactures a subassembly in-house, it incurs a fixed setup cost as well as a variable manufacturing cost. The following table shows the setup cost, the manufacturing time per subassembly, the manufacturing cost per subassembly, and the cost to purchase each of the subassemblies from an outside supplier:

Determine how many units of each subassembly Roedel should manufacture and how many units Roedel should purchase.

What is the total manufacturing and purchase cost associated with your recommendation?

$   

Suppose Roedel is considering purchasing new machinery to produce DVD cartridges. For the new machinery, the setup cost is $3000; the manufacturing time is 2.5 minutes per cartridge, and the manufacturing cost is $2.60 per cartridge. Assuming that the new machinery is purchased, determine how many units of each subassembly Roedel should manufacture and how many units of each subassembly Roedel should purchase.

What is the total manufacturing and purchase cost associated with your recommendation?

$   

Do you think the new machinery should be purchased?

YES OR NO?

Subassembly Setup
Cost($) Manufacturing
Time per Unit(min.) Manufacturing
Cost per Unit($) Purchase Cost
per Unit($) Base 1000 0.9 0.40 0.65 TV cartridge 1200 2.2 2.90 3.45 DVD cartridge 1900 3.0 3.15 3.70 TV keypad 1500 0.8 0.30 0.50 DVD keypad 1500 1.0 0.55 0.70

Explanation / Answer

Now it is required to know what is time required to produce 1 unit of TV remote and 1 unit of DVD remote

Now 1 unit of TV remote needs time in minutes = time required by base + time by TV cartridge + time TV key pad = 0.9 + 2.2+0.8 = 3.9 minutes

1 unit of DVD remote needs time in minutes =  time required by base + time by DVD cartridge + time by DVD key pad = 0.9+3+1 = 4.9 minutes

Please consider the below total time required to produce 7000 units of TV remote and 3000 units of DVD remote

Now only 500 hours = 30000 minutes only available for manufacturing which = 30000/51800 = 57.92% of time required.

Now based on in 57.92 % time of ( 51800 time required )we can produce 4054 units of TV remote and 2896 units of DVD remote.

Similarly we break it up further

B)We can calculate the time taken to by each product to produce 7000 units of TV remote and 5000 units of DVD remote

Please find the summary of stock purchased and manufactured if the cost and time of DVD cartridge

As per the below table time required to produce cartridge is 30000 minutes which is 30000/49300 = 60 .85% of time required to produce the demand. So we can estimate the number of units can be produced in 30000 minutes .

Similar to above solution we can break it up and calculate the cost and time required if the set cost of DVD cartridge is changed to $ 3000 , time per unit is 2.5 minutes and cost per unit $ 2.6 for manufacturing .

Please consider the detailed table

Product Time required per unit QTY requirement Time Taken TV remote 3.9 7000 27300 DVD remote 4.9 5000 24500 Total 51800

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