Question

A.J.'s Wildlife Emporium manufactures two unique birdfeeders (Deluxe and Super Duper) that are manufactured and assembled in up to three different workstations (X, Y, and Z) using a small batch process. Each of the products is produced according to the flowchart below. Additionally, the flowchart indicates each product's price, weekly demand, and processing times per unit. Batch setup times are negligible. A.J. can make and sell up to the limit of its weekly demand and there are no penalties for not being able to meet all paid $18 per hour. The plant operates following questions ofthe demand. Each workstation is staffed by a worker who is dedicated to work on that workstation alone and is hours per week, with no overtime. Overhead costs are $3,000 per week. Based on the information provided, as well as the information contained in the flowchart, answer the Deluxe Step 1 Step 2 Step 3 Product: Deluxe $13 27 min) /16 min) Demand: 53 units/wk Raw materials Purchased part Super Duper Step 1 Station X (27 min) Step 3 Station Y (21 min) Product: Super Duper Price: Dema Step 2 Station Z (10 min) $7 $68/unit : 65 units/wk Raw materials Purchased part a. Using the traditional method, which bases decisions solely on a product's contribution to profits and overhead, what is the optimal product mix and what is the overall profitability? The product mix obtained using the traditional method is as follows. (Enter your responses as whole numbers.) Deluxe:units/week, Super Duper:units/week.

Answer 1

a) using traditional method,

Workload of station X = 53*15+65*27 = 2550 minutes

Workload of station Y = 53*16+65*21 = 2213 minutes

Workload of station Z = 53*27+65*10 = 2081 minutes

Available capacity for each station = 40*60 = 2400 minutes

Workload of station X is more than capacity. Therefore, station X is the bottleneck.

Unit profit of product Deluxe = 72-13-11 = $ 48

Unit profit of product Super Deluxe = 68-7-6 = $ 55

Unit profit of product Super Deluxe is greater.

Therefore, it is prioritized. 65 units of Super Deluxe are produced as demanded.

Available capacity of bottleneck station X after production of Super Deluxe = 2400-65*27 = 645 minutes

Production of Deluxe = 645/15 = 43 units

Product mix:

Deluxe = 43 units/week

Super Deluxe = 65 units/week

Profit = total profit from both products - labor cost - overhead cost

= 43*48+65*55 - 3*40*18 - 3000

= $ 479