Hi JOhn,
Can you help me with this TPAR question
A company producing two products has bottleneck resource machine Z that is operated 10 hours a day. Conversion costs for a day is $4600.
Product Q :
SP - 18
Material cost - 12
Output per hour 80
Product P :
SP - 15
Material cost - 10
Output per hour 90
Now in TPAR calculations , return per factory hour should be throughput / bottleneck hour right
so for Product Q : 6 /10 is this right ?
But answer key says 6*80
I cant seem to understand what they have done
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Throughout
6y ago#1The return per hour = throughput per unit / bottleneck hours per unit.
If they can produce 80 units per hour, then the hours per unit are 1/80.
Therefore the TPAR = 6 / (1/80), which is the same as 6 x 80 = $480.
(Or, more logically, if the throughput is $6 per unit and they can make 80 units per hour, then the return per hour = 80 units x $6 = $480.
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