Concept explainers
Case summary:
SL Company manufactures different varieties of chemical products utilized by photo-processors. It was bought out by a corporation recently. The managers have been assigned with the task of working jointly to manage the operations efficiently.
The manager of a department is given a weekly financial plan of $11,980 for the manufacturingof three chemical products. The budget is for, paying the expenses of labor, materials, and so forth. The manager is looking at maximizing the contribution from the given resources.
To determine:The new constraint for material A if there is a 5% waste factor.
Introduction:
Linear programming:
Linear programming is a mathematical modeling method where a linear function is maximized or minimized taking the various constraints present in the problem into consideration. It is useful in making quantitative decisions in business planning.
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Chapter 19 Solutions
OPERATIONS MANAGEMENT (LL) W/CONNECT
- Tropical Leisure Limited Tropical Leisure Limited has been making high quality Caribbean leisure wears for over twenty-fiveyears, in old rented premises located in the heart of the Barbadian capital of Bridgetown. Thecompany has a flexible labour force of about twenty employees and three directors, only one ofwhom, namely Mr. Grant, the managing director, is fully active in the business.The company specializes in leisure and swim wear garments. Their current range consists of teeshirts, shorts, skirts and bath suits in rich vibrant Caribbean colours and styles for men, women andchildren. The company capacity is 400-500 garments per week, depending on style and continuityof the production run, but additional floor space and machines could be brought in quickly to raiseproduction levels to a maximum of 1000 garments weekly if required.Trade sources estimated that the Barbadian market was valued at US$ 1.5 billion in 2010 but sincethen inflation and recession has deflated the market,…arrow_forwardFishing Products Limited is analysing the performance of its cash management. On average,the firm holds inventory 45 days, pays its suppliers in 25 days, and collects its receivables in20 days. The firm has a current annual outlay of $10,800,000 on operating cycle investments.The company currently pays 10 per cent for its negotiated financing. (Assume a 360-dayyear.)Required:Calculate:i.) the firm’s cash conversion cycle. ii.) the firm’s operating cycle. iii.) the daily expenditure and the firm’s annual savings if the operating cycle is reduced by15 days.arrow_forwardTyrene Products manufactures recreational equipment. One of the company’s products, a skate-board, sells for $37.50. The skateboards are manufactured in an antiquated plant that relies heavily on direct labor workers. Thus, variable costs are high, totaling $22.50 per skateboard of which60% is direct labor cost.Over the past year the company sold 40,000 skateboards, with the following operating results: Sales (40,000 skateboards) $1,500,000 Variable expenses 900,000 Contribution margin 600,000 Fixed expenses 480,000 Net operating income $ 120,000 Management is anxious to maintain and perhaps even improve its present level of income from theskateboards. Required: 1. Compute ( a ) the CM ratio and the break-even point in skateboards, and ( b ) the degree of oper-ating leverage at last year’s level of sales. 2. Due to an increase in labor rates, the company estimates that variable costs will increase by$3 per skateboard next year. If this change takes place and the selling…arrow_forward
- Kpogas produces chairs and tables. Using economic forecast for the next month, Kpogas’ marketing manager has judged that during that period, it will be possible to sell as many chairs or tables as the company can produce. Management must now recommend a production target for next month. That is, how many chairs and tables should be produced if Kpogas’ management wishes to maximize next month’s profit contribution? Making this decision requires a consideration of the following key factors: ● Kpogas’s unit contribution margin is GH¢ 5,000 on each chair that is sold and GH¢ 4,000 on each table that is sold. ● Each product is put through Kpogas’s machining operations in both department A and department B. For next month’s production, the two departments have 150 and 160 hours available time, respectively. Each chair produced uses 10 hours of machining in department A and 20 hours of machining in department B, whereas each table produced uses 15 hours of machining in department A and 10…arrow_forwardUse Excel to make calculations Given the following sales data: Quarter Year 1 Year 2 1 120 150 2 160 200 3 210 250 4 130 170 Compute the seasonal index for each quarter and forecast quarterly demand for year 3 with a projected annual demand of 1000. The efficiency of a production unit is 70 percent. The unit produces an average of 100 products per day. Determine the effective capacity of the unit. The utilization of a machine is 60 percent. The machine has a design capacity of 150 units per hour and an effective capacity of 100 units per hour. Find the efficiency of the machine. FloorsRUs is considering new locations for its manufacturing plants. Costs for constructing a new facility in Huntsville are $1,100,000 and the company estimates that for every product from its new line, there would be an additional cost of $3. If the company were to locate in Hays, the new facility would cost $1,800,000 and each product would incur a $2…arrow_forwardConsider the following short case as you respond to the question:Abruzzi's Italian Kitchen is a small family restaurant with an administrative staff of four people. Giuseppi Abruzzi is the chief executive officer; his wife Maria is the chief financial officer. Their son Antonio is responsible for all transactions dealing with kitchen supplies, including the raw materials for menu items; their son Carlo is responsible for all transactions dealing with dining room supplies, such as eating utensils. The restaurant's administrative practices have developed over the ten years of its existence with minimal reliance on information technology and formal procedures and a stronger emphasis on interpersonal relationships with a few reliable vendors. Once a month, Antonio places orders for kitchen supplies with one of four vendors based on price; the supplies are usually received within ten calendar days. On receipt of the supplies, Antonio pays the vendor with a company check. Carlo follows a…arrow_forward
- Structure Furniture, manufactures coffee tables. Structure Furniture has a policy of adding a 20% markup to full costs and currently has excess capacity. The following information pertains to the company's normal operations per month: Output units Machine-hours 30,000tables 8,000hours Direct manufacturing labour-hours 10,000hours Direct materials per unit Direct manufacturing labour per hour Variable manufacturing overhead costs Fixed manufacturing overhead costs Product and process design costs Marketing and distribution costs S100 S12 $322,500 $1,200,000 $900,000 $1,125,000 a) Structure Furniture is approached by an overseas customer to fulfill a one-time-only special order for 1,000 units. All cost relationships remain the same except for a one-time setup charge of $20,000. No additional design, marketing, or distribution costs will be incurred. What is the minimum acceptable bid per unit on this one-time-only special order? b) What is the Structure Furniture full product cost for…arrow_forwardCanfield Transition Centers is a not-for-profit organization to teach new technical skills to individuals looking to change careers. Canfield operates four campuses (Construction, Electrical, Plumbing, and Carpentry). Because the programs require all-day (eight-hour) attendance, each campus operates a cafeteria, which is funded by various business and civic organizations. The CFO of Canfield is committed to ensuring that the centers operate as efficiently as possible and monitors the productivity of all functions, including support functions. Data on meals served and staff-hours for the cafeterias at the four campuses for the most recent reporting period follow: Meals served Staff hours Campuses Construction 4,862 455 Construction Electrical Plumbing Carpentry Electrical 4,032 425 Required: Compute the partial productivity measures for cafeteria staff for each of the four campuses. Note: Round your answers to 2 decimal places. Partial Staff Productivity Plumbing 5,997 505 Carpentry…arrow_forwardHERO Corporation is considering three options for managing its data processing operation: continuing with its own staff, hiring an outside vendor to do the managing (referred to as outsourcing), or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of pesos) depends on demand as follows: Demand Demand Demand Staffing Options High Medium Low Own staff 352 325 300 Outsider vendor 450 300 150 Combination 400 325 250 If the decision maker knows nothing about the probabilities of the four states of nature, what is the recommended decision using:i. the optimistic approach and the conservative approach iii. the minimax regret approach iv. the Laplace methodarrow_forward
- Production and Materials Purchases Budgets White Corporation’s budget calls for the following sales for next year:Quarter 1 90,000 units Quarter 3 68,000 unitsQuarter 2 76,000 units Quarter 4 96,000 unitsEach unit of the product requires 3 pounds of direct materials. The company’s policy is to begineach quarter with an inventory of product equal to 5% of that quarter’s estimated sales requirementsand an inventory of direct materials equal to 20% of that quarter’s estimated direct materials requirements for production.Required Determine the production and materials purchases budgets for the second quarter.arrow_forwardLou Silva has owned and operated The Wellness Store for fifteen years. The company's year-end is December 31st. The following chart lists the company's assets owned prior to 2021 and their UCC balances at the end of 2020. Asset UCC Balance Store (building purchased in 2005) $100,000 Delivery van (Class 10) 15,000 Furniture and office equipment (Class 8) 30,000 Photocopier purchased in 2019 (Separate Class 8) 2,000 Patent (purchased in 2018) 10,000 The following transactions took place in 2021: a. Lou purchased $2,000 worth of small tools (each costing under $500). b. The delivery van was sold for $12,000. The original cost was $20,000. A second-hand van was purchased in the year for $16,000. c. $15,000 was paid for an air conditioning system in the building, which was added to the cost of the standard Class 1 pool. d. Lou sold the photocopier for $1,500 in the year, and will replace it in January 2022 with a second-hand model valued…arrow_forwardA plant manager of a chemical plant must determine the lot size for a particular chemical that has a steadydemand of 30 barrels per day. The production rate is 190 barrels per day, annual demand is 10,500 barrels,setup cost is $200, annual holding cost is $0.21 per barrel, and the plant operates 350 days per year.a. Determine the economic production lot size (ELS).b. Determine the total annual setup and inventory holding cost for this item.c. Determine the time between orders (TBO), or cycle length, for the ELS.d. Determine the production time per lot.What are the advantages of reducing the setup time by 10 percent?arrow_forward
- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,