Problem
Roedel Electronics produces a variety of electrical components, including a remote controller for televisions and a remote controller for VCRs. Each controller consists of three subassemblies that are manufactrued by Roedel: a base, a cartridge, and a keypad. Both controllers use the same base subassemby, but different cartridge and keybad subassemblies.Roedel's sales forcast indicates that 7000 TV controllers and 5000 VR controllers will be needed to satisfy demand during the upcoming Christmas season. Beause only 500 hours of in-house manufacturing time are available, Roedel is considering purchasing some, or all, of the subassemblies from outside suppliers. If rodel manufactures a subassembly in-house, it incurs fixed setup cost as well as a variable manufacturing cost.
|
Subassembly
|
Setup Cost ($)
|
Manufacturing Time per Unit (min.)
|
Manufacturing Cost per Unit ($)
|
Purchase Cost per Unit ($)
|
|
Base
|
1000
|
0.9
|
0.40
|
0.65
|
|
TV cartridge
|
1200
|
2.2
|
2.90
|
3.45
|
|
VCR cartridge
|
1900
|
3.0
|
3.15
|
3.70
|
|
TV keypad
|
1500
|
0.8
|
0.30
|
0.50
|
|
VCR keypad
|
1500
|
1.0
|
0.55
|
0.70
|
a) Determine how many units of each subassembly Roedel should manufacture and how many units Roedel should purchase. What is the total manufacturing and purchase cost associated with your recommendation?
b) Suppose Roedel's considering purchasing new machinery to produce VCR cartridges. For the new machinery, the setup cost is $3000; the manuacturing time is 2.5 mins per cartridge, and the manufacturing cost is $2.60 per cartridge. asumming that the new machinery is purchased, determine how many unitsof each subassembly Roedel should manufacture and how many units of each subassembly Rodel should purchase. Why is the total manufacturing and purchase cost asociated with your recommendation? Do you think the new machinery should be purchased? Explain.