22) Bods Grill Inc. manufactures two types of grills, Deluxe and Super Duper, th

Question

22) Bods Grill Inc. manufactures two types of grills, Deluxe and Super Duper, that are assembled in 3 workstations. Setup times are neglegible and capacity cushion is maintaned at 10%. Each workstation is staffed by a worker and paid $16 per hour. The plant operates 40 hours a week with overhead costs of $2,000 per week. a. Which of the three workstations X, Y, or Z serves as the bottleneck for Bod Grill Inc.? b. Calculate () the optimal product mix quantity and (i) the profitability using.only bottleneck method. Deluxe Step 1 at Workstation Z (30 min) Step 2 a Werkstat:00 Y (15 ms) Finish with Step3 at workstatsceX (1S min) Prodsct: Delune price, $73 / mint Demand: 50 uruswk. S9 Raw Materials Purchased Part Super Duper Prodnct: Super Duper Price: $80 unit Demand: 60 ts wk Step 2 at Finish with Step Step 1 at workstaticax (30 min) at workstation (20 min) workstation Z- (10 min) Raw Materials 56 Purchased Par

Explanation / Answer

Let's see how many of each product can be processed by different workstations after 10% cushion of 36 hours

The labour hour rate amended = 16*40/36 = $17.78/hr

The contribution per Deluxe and Super Duper

Deluxe = 75 - 9 - 8 - 4 - 6 - 4 = 44/unit

Super Duper = 80 - 4 - 8 - 2.67 - 6 - 5.33 = 54/unit

Total Contribution possible

Deluxe = 50*44 = $2,200

Super Duper = 60*54 = $3,240

To produce the demand the required hours at each workstation

So we need contribution per hour at bottleneck activity

Deluxe = total possible contribution / hours = 2200/12.5 = $176/ hour

Super Duper = total possible contribution / hours = 3240/30 = $108/ hour

So, at the bottleneck activity, Deluxe should be produced first and the remaining capacity be used for Super Duper,

So Super Duper can only use 36-12.5 = 23.5 hours

and only 47 units can be produced .

So the optimal product mix is 50 units of Deluxe and 47 units of Super Duper to maintain the 10 % Capacity Cushion [or else it is 50 units and 55 units]

Profitability

Contribution

Deluxe 2,200

Super Duper 2,538

Total 4,738

Less

Fixed OH 2,000

Profit 2,738

X Y Z Bottleneck Throughput Deluxe 144 144 72 Z 72 Super Duper 72 108 216 X 72

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