Bottleneck

This topic has 5 replies, 2 voices, and was last updated 2 years ago by John Moffat.

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January 9, 2020 at 7:14 am #557219
iza1
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Hi Sir

i have a concern regarding bottleneck in TP
If labour time required for two products in two departments are as follows

Dept A : Product A : 10 minutes Product B : 20 minutes
Dept B : Product A : 15 minutes Product B : 20 minutes

Dep A has 600 mins available per day and Dep B has 930 minutes available.
Maximum demand daily A : 50 and B is 25

Here to identify bottleneck is it right to do like this ?

To fulfill maximum demand
Dept A requires 500 + 500 = 1000 hours
Dept B requires 750 + 500 = 1250 hours

From this how to get to bottleneck ?
January 9, 2020 at 7:41 am #557223
iza1
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Here if i compare required hours with available both of them seems as bottleneck but answer says otherwise
January 9, 2020 at 7:56 am #557229
John Moffat
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We obviously do not know how many of each product they actually end up producing because we do not have more information.

However at the extremes, if they were to only produce Product A then Department A could produce 600/10 = 60 units whereas Department B could produce 930/15 = 62 units. So in this case Department A would be the bottleneck.

If, on the other hand, they were to only produce Product B, then Department A could produce 600/20 = 30 units whereas Department B could produce 930/20 = 46.5 units. So again Department A would be the bottleneck.

Therefore whatever ends up happening, it is Department A that is the bottleneck.
January 24, 2020 at 4:19 pm #559830
iza1
- Topics: 114
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I got this. But in Sep 16 exam , 11th question its pretty much the same detail. There if i have to identify which is bottleneck we compare hours required with hours available and decide that process 2 is bottleneck.

I was wondering why we cant apply that here ?
January 24, 2020 at 4:29 pm #559831
iza1
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Can you kindly help me with this statement as well :Work in progress should be valued at material cost that no value will be added to profit until the sale takes place.

i know the assumption that material is only variable. but rest of the statement i cant understand
January 25, 2020 at 10:18 am #559857
John Moffat
Keymaster
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It is the same as for the normal valuation of inventories in that they should be valued at cost not at selling price. Profit only arises when the goods are actually sold and not while they are still in inventory.
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