Question

Jon Wayne is in the dessert making business. He produces two special “dessert boxes”: (1) Cherry Pop and (2) Chocolate Lover. His operating expenses total $2,000 per week. Jon is supported by three staff members, who are each responsible for different parts of the dessert box production process.

• Bobo is responsible for ingredient mixing;

• Samuel is in charge of decorating the desserts; and

• Nancy is the hardest worker of the three. She packages the desserts with great care.

The working capacities of these three workers are as follows:

Activity (Person Assigned) Estimated minutes per week

Mixing (Bobo) 2,400

Decorating (Samuel) 2,400

Packaging (Nancy) 2,400

Other relevant information for the two products appear below:

Cherry Pop Chocolate Lover

Price per box $14.00 $12.00

Direct materials $2.00 $1.50

Demand per week 500 boxes 400 boxes

Required time required in each activity per box (in minutes) is presented below:

Cherry Pop Chocolate Lover

Mixing 2 2

Decorating 2 3

Packaging 4 3

(a) Identify the binding constraint of Jon Wayne’s business. Show all working.

(b) Based on the constraint you identified, what is the production mix that would maximise profit under current production conditions? Show all workings.

(c) Identify two actions that could be undertaken to ‘elevate’ the constrain you identified in part (a). Explain how the actions you identified will elevate the current constraint.

Answer 1

Solution:

Answer (a):

Mixing hours required per week on the basis of demand : 500 * 2 + 400 * 2 = 1800

Decorating hours required per week on the basis of demand : 500 * 2 + 400 * 3 = 2200

Packaging hours required per week on the basis of demand : 500 * 4 + 400 * 3 =3200

Hours available for each activity on the basis of current distribution of work : 2400 hours per week

• Packaging hours becomes the binding constaint of Jon Wayne' business.

Answer (b):

Statement of contribution per limiting factor i.e. packaging hours:

	Cherry pop	Chocolate lover
Contribution per box	12	10.5
Packaging hours	4	3
Contribution per packaging hour	3	3.5
Rank	2	1

Statement of optimum product mix (per week):

	Cherry pop	Chocolate lover
Boxes	300	400
Packaging hours per unit	4	3
Total packagimg hours	1200	1200	2400

Available hours will first be utilised for chocolate lover because it is providing higher contribution per limiting factor i.e. packaging hours.

Answer (c):

Action 1: We have save used hours accessible for bobo and samuel, those can be utilized in bundling the staying 200 boxes. Both of them can be prepared and afterward we will have the capacity to take care of the rest of the demand of 200 boxes. Save hours accessible = 600 + 200 = 800 which is precisely equivalent to the time required to bundle the rest of the cases.

Action 2: Could be to expand the nancy's accessible time by 800 mins. If unrealistic, employ any other individual yet that would cost Jon wayne some incremental cost which can be abstained from utilizing the main suggested activity.