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The M鈥揘 plant manufactures two different products: M and N. Selling prices and weekly market demands are shown in the following diagram. Each product uses raw materials with costs as shown. The plant has three different machines: A, B, and C. Each performs different tasks and can work on only one material unit at a time.

Process times for each task are shown in the diagram. Each machine is available for 2,400 minutes per week. There are no 鈥淢urphys鈥 (major opportunities for the system to foul up). Setup and transfer times are zero. Demand is constant.

Operating expenses (including labor) total a constant $12,000 per week. Raw materials are not included in weekly operating expenses.

a. Where is the constraint in this plant?

b. What product mix provides the highest profit?

c. What is the maximum weekly profit this plant can earn?

Short Answer

Expert verified
  1. The load of resource B is the highest. Therefore, the constraint is in Machine B, the bottleneck.
  2. The best product combination is considering all of M and as many of N as possible.
  3. The maximum weekly profit this plant can earn is $ 600.

Step by step solution

01

Introduction

Supply Chain Management encompasses, organizes, plans, controls, and executes all business operations related to a company's acquisition, production, distribution, and customer satisfaction.

02

(a) Analyze the constraint

A load of Machines:

MachineA=100Munits20minutes=2000minutesMachineB=100Munits15minutes=1500minutesMachineA=50Nunits30minutes=1500minutesTheloadofMachineB=1,500+1,500=3,000minutesMachineC=100Munits15minutes=1500minutes

The load of resource B is the highest.

Therefore, the constraint is in Machine B, the bottleneck.

03

(b) Determine the highest profit

The contribution margin of the products:

ProductsM=190-(60+40)=190-100=$90unitProductsN=200-(40+40)=200-80=$120/unit

The contribution margin of products per unit of bottleneck time:

ProsuctM=9015=$6ProsuctN=12030=$4Availabilitycapacity=2400minutesRemainingcapacity=2400-(10015)=2400-1,500=900minutesProductionquantityofproductN=90030=30units

Therefore, the best product combination is considering all of M and as many of N as possible.

04

(c) Determine the maximum weekly profit

Let鈥檚 take 100M unit and 30N unit:

WeeklyproductionofProductM=100$90=$9000WeeklyproductionofProductN=30$120=$3600WeeklyProduction=$9,000+$3,600=$12,600WeeklyProduction=$12,600-$12,000=$600

Therefore, the maximum weekly profit this plant can earn is $ 600.

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