Question

Problem 2 Schmidt Industries makes four different snake traps; the Harlan, the Gaylen, the Leah and the Matthew. The Harlan sells for $200 and has $80 in parts; the Gaylen sells for $150 and requires $60 in parts; the Leah sells for $100 and has $40 in parts; and the Matthew sells for $75 but requires $20 of parts. 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 these 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 needed at each machine (minutes) Machine A Machine B Machine C Machine D 10 10 10 Model Harlan Gaylen Leah Matthew 15 10 10 10 Schmidt Industries has forecasted demand of 80 Harlans, 60 Gaylens, 40 Leahs and 20 Matthews for the coming month. 1. Which work center is of greatest concern to the operations manager? Show your work and explain why 2. Using the bottleneck method (contribution margin per BN minute), in what sequence should products be prioritized for production? Show your work. 3. Using the bottleneck method, what is the optimal product mix? (Remember you need to only calculate for BN to determine the mix.) Show your work.

Answer 1

1)

Load of machine A = SUMPRODUCT of Processing time and Forecast demand

= 80*10+60*10+40*5+20*5

= 1700 minutes

Load of machine B = SUMPRODUCT of Processing time and Forecast demand

= 80*15+60*10+40*10+20*5

= 2300 minutes

Load of machine C = SUMPRODUCT of Processing time and Forecast demand

= 80*15+60*10+40*15+20*5

= 2500 minutes

Load of machine D = SUMPRODUCT of Processing time and Forecast demand

= 80*5+60*10+40*10+20*10

= 1600 minutes

Load of machine C is the highest. Therefore, it is the bottleneck

1)

Work center C is the bottleneck. Hence, it is of greatest concern for the operations manager.

2)

Contribution per BN minute of Harlan model = (200-80)/15 = $ 8

Contribution per BN minute of Gaylen model = (150-60)/10 = $ 9

Contribution per BN minute of Leah model = (100-40)/15 = $ 4

Contribution per BN minute of Matthew model = (75-20)/5 = $ 11

Products are prioritized for production in order of their contribution per BN minute

Therefore, priority of products for production is: Matthew, Gaylen, Harlan and Leah

3)

BN minutes remaining on machine C after production of Matthew, Gaylen and Harlan = 2400-(20*5+60*10+80*15)

= 500 minutes

Production of Leah = 500/15 = 33 units

Optimal product mix is:

Harlan = 80

Gaylen = 60

Leah = 33

Matthew = 20