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Hi Sir,
Please help me in solving the following question –A Company A uses TP accounting. It produces 2 products X and Y using same types of machines – M and T for both the products. Machine time on Machine type M is a production bottleneck. Following data is available –
For Product X – TPA ratio – 2.4, Machine time M per unit produced – 15 mins. Machine time T per unit produced – 30 mins.
For Product Y – TPA ratio – 3, Machine time M per unit produced – 30 mins. Machine time T per unit produced – 20 mins.
There is unlimited Sales Demand for both products.
If extra production capacity is made available, amounting to 10 extra machine hours each for both M and T machines, how many additional units of output would be produced in order to maximize profit?
You must have an answer in the same book in which you found the question. Do not simply expect full answers to full question in this forum – you should ask about whatever it is in the answer that you are not clear about. Then I will help you.
Apologies, Here are the options –
A. 10 units of Y and 20 units of X.
B. 20 units of Y and 40 units of X.
C. 20 units of Y
D. 40 units of X.You would always prefer the product with the highest TPAR, which is product Y.
Each unit of Y spends 0.5 hour in the bottleneck process (M).
Therefore with 10 extra hours for M, they would produce 10/0.5 = 20 additional units of Y.
Thank you, I had a doubt if we could split the production between these 2 products. But, since we only have 10 additional hours each for M and T machines both of which should be operated to complete the manufacturing of the product. It has to be only one product (with highest TPAR).
Please let me know if this is the right way of deciphering the optimal plan for maximizing profit?
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