Question

Schmidt Industries makes four different snake traps; the Harlan, the Gaylen, the Leah and the Matthew. The Harlan sells for $200 and has $40 in parts and $40 in labor; the Gaylen sells for $150 and requires $30 in parts and $30 in labor; the Leah sells for $100 and has $20 in parts and $20 in labor; and the Matthew sells for $75 but requires only $10 of parts and $10 of labor. Schmidt Industries has four machines (we'll call them A, B, C, and D for convenience) that are used in the production of each of the se products. Each of these machines is available for 40 hours a week and there is no setup time required when shifting from the production of one product to any other. The processing requirements to make one unit of each product are shown in the table.

Processing Time on Each Machine in Minutes
Model Machine A Machine B Machine C Machine D
Harlan 10 15 15 5
Gaylen 10 10 10 10
Leah 5 10 15 10
Matthew 5 5 5 10
Schmidt Industries has monthly fixed costs of $5000 and has a demand forecast of 80 Harlans, 60 Gaylens, 40 Leahs and 20 Matthews for the coming month. How many of each of the four models should Susan, the operations manager, schedule for production this month?

Answer 1

Answer and Explanation:

The computation of schedule for production is shown below:-

The processing requirements for the demand forecast result in a need for

Machine A = 80 × 10 + 60 × 10 + 40 × 5 + 20 × 5

= 1,700 ≤ 2,400

Machine B = 80 × 15 + 60 × 10 + 40 × 10 + 20 × 10

= 2,300 ≤ 2,400

Machine C = 80 × 15 + 60 × 10 + 40 × 15 + 20 × 10

= 2,500 ≥ 2,400

Machine D = 80 × 5 + 60 × 10 + 40 × 10 + 20 × 10

= 1,600 ≤ 2,400

The contribution margin per bottleneck minute is

Harlan = (200 - 40 - 40) ÷ 15

= $8 per minute

Gaylen = (150 - 30 - 30) ÷ 10

= $9 per minute

Leah = (100 - 20 -20) ÷ 15

= $4 per minute

Matthew = (75 - 10 - 10) ÷ 5

= $11 per minute

Therefore the products will be manufactured in the order that is Matthew, Gaylen, Harlan and Leah. So, the product mix of Matthews is 20 by using machine 100 minutes of Machine C, for Gaylen is 60 by using 600 minutes of Machine C, For Harlans is 80 by using 1,200 minutes of Machine C and For Leahs is 33 by using up the left 500 minutes of machine C time.