Reference no: EM13843873
Problem 1:
In a job shop, effective capacity is only 60% of design capacity, and actual output is 70% of effective capacity output. Hints:
Utilization = Actual output/Design capacity
Efficiently = Actual Output/ Effective capacity
(i) What is the ratio of Actual Output over the Design Capacity?
(Hints: Actual output / Design capacity)
(ii) What design capacity would be needed to be achievedusing the above datafor actual (actual/design) output (obtained above) of eight jobs per week?
(Hints: Actual/ Design = # of jobs / Design capacity)
Problem 2:
Afurniture manufacturing company received the demand forecast of an office item from its marketing department. The manufacturer plans to produce entire forecasted quantity (Qf) of4,000 unitsfor the upcoming month. Fixed cost of $20,000 per month is allocated to produce the items, and the variable cost is $11 per item.
QBEP = FC/Rev - VC
Hints:
i) Find the break even quantity (Qbep) if the item sells for $15 each.
ii) What quantity is the smart choice for manufacturer to plan for production?
Hints: look at forecast and break even quantity.
iii) At what price the item must be sold to obtain a monthly profit of $4,000, assuming that entire products will besold irrespective of the quantities (either Qfor Qbep) produced?
Hints: Profit= Qf(R-v)-FC and/orProfit= Qbep(R-v)-FC
iv) Recommend which quantity (QF or Qbep)the manufacturer should plan to produce in order to make the profit $4000.
Hints: Look at the selling price for either case.
v) Comment: whatare the risks, and what is the gain?
Problem 3:
Why it is important to match process capabilities with product's market demand? What are the risks and what is the benefit?