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A manufacturing company uses throughput accounting. It manufactures two products, X and Y, using the same types of machines (Machine M and Machine T) for both products. Machine Type M is a production bottleneck. The following info is available.
Product X Product Y
Throughput accounting ratio 2.4 3.0
Machine M time per unit produced 15mins 30mins
Machine T time per unit produced 30mins 20minsThere is unlimited sales demand for both products.
If extra production capacity is made available, amounting to 10 extra machine M hours and 10 extra machine T hours, how many additional units of output would be produced in order would be produced in order to maximise profit ?
I understand that you produce Y first because it has the highest TPAR. But with extra 10 M & T hours I don’t know what to do next.
Can you please help me answer this ???Thank you 🙂
aitezazshah: Please do not answer in this forum because it is Ask the Tutor, and you are not the tutor.
The question is about throughput accounting, and a question reference is not needed since Riia has typed out the whole question!Riaa: You are correct in saying that you would produce Y in preference to X, but the number you can produce is limited by the machine M hours available.
So….if we get 10 more M hours, then we can produce more Y’s.
Each Y takes 30 minutes of machine M time, so with 10 more hours we will produce 20 more Y’s.(machine T is irrelevant because it is not the bottleneck, and there is unlimited demand for X and Y, so we will always produce as many Y’s as possible)
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