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Hi sir, could you please help me out with this example that is in my kaplan book. They have not explained how to get the bottleneck for it.
After manufacture, the heater has to go through 3 process Assembly, quality control and packaging.
Sales price p.u: 2.25, Materials: 0.81.
machine time p.u:
Assembly: 3minutes
QC: 4min.
Packaging: 5minutes.
Total sales demand: 1500 units.
Maximum hours available for each machine are 150 (Assembly), 170(Quality Control), 250 (Packaging).
Operating expense are $4000
It says in the answer to establish the bottleneck; “The assembly hours needed for maximum production are 143.75. Which is less than the 150 hrs available. The QC hrs needed for maximum production are 178.33, which is greater than the 170hrs available. So QC is our bottleneck. The packaging hours needed for maximum production are 234.17. This is less than the 250hrs available.”My question is, how did we get the 143.75, 178.33 & 234.17 hrs? The solution wasn’t in the book. Could you clear it out for me Sir. Thanks.
I don’t have the Kaplan book and so I can’t look at the actual question, but are you sure that you have copied it correctly (and included all of the information – are you sure that there are no other products being produced as well?)?
If you have copied it all correctly, then I have no idea how they have arrived at the figures in their answer. If they are only producing heaters, then for maximum production of 1,500 units the time needed in assembly would be 1,500 x 3 / 60 = 75 hours.
I can only assume that they are producing other products as well, in which case we obviously need the total time for maximum production of all the products (but you would have to be told about the other products in the question).
Sorry, they do have 3 products. The ones ive given above is for Product B.
For product A: SP p.u = $2, materials = $0.50.
Machine time p.u in minutes: assembly 2, QC 3, Packaging 4.
Demand is 1000 units.For product C: SP p.u $1.75, materials $0.35.
Machine time p.u in minutes: assembly 2.5, QC 2, packaging is.
Demand is 850 units
How do we get the bottleneck?The total hours needed in assembly for maximum production is as follows:
(1,000 units x 2 minutes) + (1500 units x 3 minutes) + (850 units x 2.5 minutes) = 8,625 minutes
8,625 minutes = 8625/60 = 143.75 hours. There are 150 hours available in assembly and therefore assembly is not the bottleneck.
If you do the same for QC and for finishing, the rest of the answer you should now make sense.
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