Question

Roedel Electronics produces tablet computer accessories, including integrated keyboard tablet stands that connect a keyboard to a tablet device and holds the device at a preferred angle for easy viewing and typing. Roedel produces two sizes of integrated keyboard tablet stands, small and large. Each size uses the same keyboard attachment, but the stand consists of two different pieces, a top flap and a vertical stand that differ by size. Thus, a completed integrated keyboard tablet stand consists of three subassemblies that are manufactured by Rodel: a keyboard, a top flap, and a vertical stand. Roedel's sales forecast indicates that 7,000 small integrated keyboard tablet stands and 5,000 large integrated keyboard tablet stands 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 Rodel 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:

Subassembly SetupCosts Manufacturing Time per unit Manufaturing Cost Per Unit Purchase cost per Unit
Keyboard 1000 0.90 0.40 0.65
Small top flap 2000 2.20 2.90 3.45
Large top flap 1900 3.00 3.15 3.70
Small vertical stand 1500 0.80 0.30 0.50
Large vertical stand 1500 1.00 0.55 0.70

a. Determine how many units of each subassembly Rodel should manufacture and how many units of each subassembly Rodel should purchase. What is the total manufacturing and purchase cost associated with your recommendation?
b.
Suppose Roedel is considering purchasing new machinery to produce large top flaps. For the new machinery, the setup cost is $3,000; the manufacturing time is 2.5 minutes per unit, and the manufacturing cost is $2.60 per unit. 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? Explain.
Do this using Excel

Answer 1

1. Determine the manufacturing quantities and purchase quantities for each subassembly:
• Start by setting up a table in Excel with columns for subassembly names, setup costs, manufacturing time per unit, manufacturing cost per unit, purchase cost per unit, units needed for small stands, and units needed for large stands.
• Calculate the total hours needed for manufacturing each subassembly by multiplying the manufacturing time per unit by the total units needed for each stand size.
• Then, calculate the total setup cost and manufacturing cost for producing the required units of each subassembly in-house.
• Compare the total costs of producing in-house versus purchasing from outside suppliers for each subassembly to determine the most cost-effective approach.
2. Evaluate the scenario with the new machinery:
• Consider the cost and efficiency of the new machinery for producing large top flaps. Use the setup cost, manufacturing time, and manufacturing cost provided for the new machinery in your calculations.
• Determine the new total manufacturing and purchase costs for the large top flaps, factoring in the investment in the new machinery.
• Compare the total costs with and without the new machinery to decide whether purchasing the new machinery is cost-effective.

Once you’ve arranged your data and performed the calculations in Excel, you’ll be able to find the optimal manufacturing and purchasing quantities for each subassembly and make a decision regarding the potential purchase of the new machinery.

Answer 2

Roedel Electronics faces a decision about the manufacture or purchase of integrated keyboard tablet stands, optimizing for setup costs, manufacturing time, costs, and purchases within their limited capacity. Considering new machinery alters the cost structure and requires reevaluation of in-house manufacturing vs. supplier purchases.

Step-by-step explanation:

The question refers to a business scenario where Roedel Electronics needs to decide on the number of tablet computer accessories, specifically integrated keyboard tablet stands, to manufacture in-house and the number to purchase from external suppliers. With only 500 manufacturing hours available, Roedel must consider setup costs, manufacturing time and costs, and purchase costs. Excel can be used to calculate the total cost for various manufacturing and purchasing combinations for an optimal decision. If considering new machinery, Roedel must analyze whether the investment will be cost-effective and align with demand forecasts and production capabilities.