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process alpha(bottleneck process) is expected to be operational for 8 hrs per day and can produce 1200 units of X per hr, 1500 units of Y per hr and 600 units of Z per hour. Conversion costs are $720,000 per day. the throughput contribution per unit of product X,Y,Z are $80, $80 and $200 respectively. Calculate TPAR ratio for each product.
i didnt understand their steps , if possible ,can u solve throughput per factory hr of each product.
cost per factory hr is taken as $ 90,000 (720k/8)for each product. i didnt understand that too.
the answers are 1.07, 1.33 and 1.33 for X,Y,Z.The TPAR is the throughput per hour / cost per factory hour.
The cost per factory hour is 720000 (per day) divided by 8 (hours per day) = 90000 per hour.
To get the throughput per hour, product X gives throughput contribution of 80 per unit. The process can produce 1200 units of X per hour, and so the throughput contribution per hour is 1200 units x 80 per unit = 96000
So…the TPAR for X is 96000 / 90000 = 1.07
Work through what I have written and then do it for Y and for Z 🙂
i was assuming that cost per factory hr per product should be 90,000/3=30,000. distributing cost to each product equally. why is that wrong to divide by 3?
i understood ur solution and it is easy. BPP solution is horror. that confused me a lot.The reason is that the factory overall needs to be generating at least $90,000 per hour because the whole factory is costing 720,000 and works 8 hours.
We then look and see how much each product is generating per hour. The ideal would be if each product was giving more than the 90,000 per hour cost.
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