Reference no: EM133177946
Question - Comfort Shoes is a manufacturing company producing different types of shoes. Walking Shoes, Spikes which are used by athletes and Strong Shoes which are used by Mounter's. All the three types of shoes are manufactured using same resources. Following information is available about the price and resources used for manufacturing all the three products.
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Particulars
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Walking Shoes (WS)
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Spikes (SP)
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Strong Shoes (SS)
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OMR
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OMR
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OMR
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Selling Price per pair
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30 to 34
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22.5 to 26.5
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26 to 30
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Material cost (RO 2.5 per meter)
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3.75(1.5meter)
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1.5(0.6meter)
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3(1.2 meter)
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Direct Labour (OMR 3.5 per hour)
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3.5( 1Hour)
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5.25(1.5 hour)
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3.5(1 hour)
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Machine Hours (OMR 5 per hour)
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2.00(0.8 MH)
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1.00(0.2MH)
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1.5(0.3MH)
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Expected Demand for April (Pairs of Shoes)
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1150
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700
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825
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Company has got a special order of 100 pairs for each product from Run world company who are their regular customers but at a discount price of OMR 4 for each product. This special order is not included in the above demand.
Comfort Shoes generally has sufficient resources to meet the demand but because of the limited supply from their regular supplier, the company has following resources available for the month of April.
Direct Material 3600 Meters
Direct labour 3450 Hours
Machine Hours Choose between 1200- 1250 Hours
Required -
a) What do you understand by limiting factor, evaluate the concept of outsourcing when resources are limited?
b) Calculate the optimum production Plan for Comfort shoes company for the month of April, assuming that the special order of the regular customer will be supplied in full.
c) What is the total contribution for the month of April?
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