Case Study

Son Ltd., manufactures a variety of chemical products used by photo processors. Son was recently bought out by a conglomerate, and managers of the two organizations have been working together to improve the efficiency of Son's operations.
Managers have been asked to adhere to weekly operating budgets and to develop operating plans using quantitative methods whenever possible. The manager of one department has been given a weekly operating budget of $11,980 for production of three chemical products, which for convenience shall be referred to as Q, R, and W. The budget is intended to pay for direct labor and materials. Processing requirements for the three products, on a per unit basis, are
Products| Labor | Material A | Material B|
Q 5 2 1
R 4 2 0
W 2 .5 2
The company has a contractual obligation for 85 units of Product R per week.
Material A costs $4 per pounds, as does Material B. Labor costs $8 an hour.
Product Q sells for $122 a unit, Product R sells for $115 a unit, and Product W sells for $76 a unit.
The manager is considering a number of different proposals regarding the quantity of each product to produce. The manager is primarily interested in maximizing contribution. Moreover, the manager wants to know how much labor will be needed, as well as the amount of each material to purchase.
Required
Prepare a report that addresses the following issues:
The optimal quantities of products and the necessary quantities of labor and materials.
One proposal is to make equal amounts of the products. What amount of each will maximize contribution, and what qunatities of labor and materials will be needed? How much less will total contribution be if this proposl is adopted?
How would you formulate the constraint for Material A if it was determined that there is a 5 percent waste factor for Material A and equal quantitites of each product are required?
Operations Management
Answers (1)
Daniel Lewis
Rating:5 stars
Daniel Lewis answered 12 hours later