Help please on b) ! Bubbly Company produces three types of water bottles in a si
ID: 2493897 • Letter: H
Question
Help please on b) ! Bubbly Company produces three types of water bottles in a single facility. The bottleneck operation at Bubbly company is the machine used to produce the bottles. The machine can run up to 500 hours per month. Additional data concerning these products follows: How many machine hours would be required to meet the sales demand for all boxes of bottles? Basing the decision solely on maximizing net operating income, how many boxes, if any, of each bottle type should Bubbly Company make? Up to how much would Bubbly be willing to pay, per hour, to rent additional machine time?Explanation / Answer
As the contribution per machine hr is highest and machine hr is the bottleneck in the company, The company should make maximum of 1/2 Lt bottle and then Maximum of 1 Lt and then of 2 Lt.
In this problem Sales demand is limited and hence the following is the production for maximum operating income
1/2 Lt Boxes = 100 Boxes or .................... time taken 100 Machine hrs
1 Lt Boxes = 100 Boxes.....................time taken 200 Machine hrs
2 Lts Boxes = (500-200-100)/3 = 66.67 Boxes.
Thus finally,
1/2 Lt = 100 Boxes * 150 per Box = 15000
1 Lt = 100 Boxes * 150 per Box = 15000
2 Lt = 66.67 Boxes * 150 per Box = 10000
Particulars 1/2 Lt 1 Lt 2 Lt Contribution / Box ( selling - Variable costs) 13 22 36 Machine hr Required 1 2 3 Contribution per box per machine hr 13 11 12Related Questions
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