Question

In: Finance

JAC produces two types of products (Standard and Trimline), each of which must go through three...

JAC produces two types of products (Standard and Trimline), each of which must go through three workstations for manufacturing, assembly, and quality control. The amount of time required for each model in each of the work areas is given in the following table.

Model Manufacturing Assembly Quality Control
Standard 7 minutes 3 minutes 2 minutes
Trimline 2 minutes 5 minutes 3 minutes

Ring Telephones employs ten workers, who each work a 7.5 hour day. Of these times, 1400 man-minutes per day have been allocated to manufacturing, 2100 to assembly, and 1000 to quality control. Accounting has stated that the cost of each Manufacturing minute is $0.45, each Assembly minute $0.25, and each Quality Control minute $0.10, for a Standard Model. For the Trimline model, the costs are $0.55, $0.25, and $0.15, respectively. If R.T. sells for $2 the standard models and $4 the Trimline models.

A. Formulate the model in standard form.

B. What should be the optimal daily production schedule?

Solutions

Expert Solution

A)

Statement showing calculation of Profit / (Loss) per Unit
(Amount in $)
Model Standard Trimline
Selling Price Per Unit                          2.00                     4.00
Less:- Cost per Unit:-
- Manufacturing                          3.15                     1.10
- Assembly                          0.75                     1.25
- Quality Control                          0.20                     0.45
Profit / (Loss) Per Unit                        -2.10                     1.20

B) As Trimline is profitable and Standard is in losses, its better to produce Trimline instead of Standard.

Statement showing calculation of Minimum no. of units of Trimline to be produced
Activity Manufacturing Assembly Quality Control
Minutes required in different activities for Trimline Production 2 minute 5 minute 3 minute
Total Minutes Available                    1,400                  2,100                     1,000
Trimline Units can be produced                        700                      420                         333
Conclusion
So, least i.e. 333 units of Trimline can be produced which can through to all processes and no minutes of Quality Contol activity has been left for production of Standard Model. Even also Standard model is in losses.

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