Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
12th Edition
ISBN: 9780134741062
Author: Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman
Publisher: PEARSON
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Chapter 5, Problem 9P
Summary Introduction
Interpretation: The product mix for improving the profitability and change in profit needs to be determined.
Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.
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Yost-Perry Industries’ (YPI) senior management team wants to improve the profitability of the firm by accepting the right set of orders. Currently, decisions are made using the traditional method, which is to accept as much of the highest contribution margin product as possible (up to the limit of its demand), followed by the next highest contribution margin product, and so on until all available capacity is utilized. Because the firm cannot satisfy all the demand, the product mix must be chosen carefully. Jay Perry, the newly promoted production supervisor, is knowledgeable about the TOC and the bottleneck-based method for scheduling. He believes that profitability can indeed be improved if bottleneck resourcesare exploited to determine the product mix. What is the change in profits if, instead of the traditional method that YPI has used thus far, the bottleneck method advocated by Jay is used for selecting the product mix?
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3
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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, Z) using a small batch process. Each of the products is produced according to the flowchart in Figure. 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 of the demand. Each workstation is staffed by a worker who is dedicated to work on that workstation alone and is paid $16 per hour. The plant operates 40 hours per week, with no overtime. Overhead costs are $2,000 per week. Based on the information provided, as well as the information contained in the flowchart, answer the following questions. a. Using the traditional method, which bases decisions solely on a product’s contribution to profits and overhead, what is the…
Chapter 5 Solutions
Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
Ch. 5 - Take a process that you encounter on a daily...Ch. 5 - Prob. 2DQCh. 5 - How could the efficiency of the redesigned process...Ch. 5 - Bill’s Barbershop has two barbers available to...Ch. 5 - Melissa’s Photo Studio offers both individual...Ch. 5 - Figure 5.11 details the process flow for two types...Ch. 5 - Prob. 4PCh. 5 - Super Fun Industries manufactures four top-selling...Ch. 5 - Prob. 6PCh. 5 - Yost-Perry Industries (YPI) manufactures a mix of...
Ch. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - A.J.’s Wildlife Emporium manufactures two unique...Ch. 5 - Cooper River Glass Works (RGW) produces four...Ch. 5 - Quick Stop Pharmacy is a small family-owned,...Ch. 5 - Use the longest work element rule to balance the...Ch. 5 - Johnson Cogs wants to set up a line to serve 60...Ch. 5 - Refer back to Problem 16. Suppose that in addition...Ch. 5 - To meet holiday demand, Penny’s Pie Shop...Ch. 5 - A paced assembly line has been devised to...Ch. 5 - Prob. 20PCh. 5 - Greg Davis, a business major at the University of...Ch. 5 - Prob. 1VCCh. 5 - Which boarding scenario among the different ones...Ch. 5 - How should Southwest evaluate the gate boarding...Ch. 5 - How will Southwest know that the bottleneck had...
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