Atlas Inc. is a toy bicycle manufacturing company producing a five-inch small versionof the bike that Lance Armstrong rode to win his first Tour de France. The assemblyline at Atlas Inc. consists of seven work stations, each performing a single step. Stationsand processing times are summarized here:• Step 1 (30 sec.): The plastic tube for the frame is cut to size.• Step 2 (20 sec.): The tube is put together.• Step 3 (35 sec.): The frame is glued together.• Step 4 (25 sec.): The frame is cleaned.• Step 5 (30 sec.): Paint is sprayed onto the frame.• Step 6 (45 sec.): Wheels are assembled.• Step 7 (40 sec.): All other parts are assembled to the frame.Under the current process layout, workers are allocated to the stations as shown here:• Worker 1: Steps 1 and 2• Worker 2: Steps 3 and 4• Worker 3: Step 5• Worker 4: Step 6• Worker 5: Step 7Assume the workers are paid $15 per hour. Each bicycle is sold for $6 and includesparts that are sourced for $1. The company has fixed costs of $200 per hour. DespiteLance Armstrong’s doping confession, there exists substantially more demand for thebicycle than Atlas can supply.a. What is the cost of direct labor for the bicycle?b. How much profit does the company make per hour?c. What would be the profits per hour if Atlas would be able to source the parts 10 percent cheaper ($0.90 for the parts of one unit)?d. What would be the profits per hour if Atlas were able to reduce fixed costs by 10 percent (to $180 per hour)?e. What would be the profits per hour if Atlas were able to reduce the processing time atthe bottleneck by 5 seconds per unit (assume unlimited demand)?
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
Atlas Inc. is a toy bicycle manufacturing company producing a five-inch small version
of the bike that Lance Armstrong rode to win his first Tour de France. The assembly
line at Atlas Inc. consists of seven work stations, each performing a single step. Stations
and processing times are summarized here:
• Step 1 (30 sec.): The plastic tube for the frame is cut to size.
• Step 2 (20 sec.): The tube is put together.
• Step 3 (35 sec.): The frame is glued together.
• Step 4 (25 sec.): The frame is cleaned.
• Step 5 (30 sec.): Paint is sprayed onto the frame.
• Step 6 (45 sec.): Wheels are assembled.
• Step 7 (40 sec.): All other parts are assembled to the frame.
Under the current process layout, workers are allocated to the stations as shown here:
• Worker 1: Steps 1 and 2
• Worker 2: Steps 3 and 4
• Worker 3: Step 5
• Worker 4: Step 6
• Worker 5: Step 7
Assume the workers are paid $15 per hour. Each bicycle is sold for $6 and includes
parts that are sourced for $1. The company has fixed costs of $200 per hour. Despite
Lance Armstrong’s doping confession, there exists substantially more demand for the
bicycle than Atlas can supply.
a. What is the cost of direct labor for the bicycle?
b. How much profit does the company make per hour?
c. What would be the profits per hour if Atlas would be able to source the parts 10 percent cheaper ($0.90 for the parts of one unit)?
d. What would be the profits per hour if Atlas were able to reduce fixed costs by 10 percent (to $180 per hour)?
e. What would be the profits per hour if Atlas were able to reduce the processing time at
the bottleneck by 5 seconds per unit (assume unlimited demand)?
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