Bikes The New England Cycle Company is planning next month’s production of its t
ID: 462598 • Letter: B
Question
Bikes The New England Cycle Company is planning next month’s production of its two bicycles: its B2 tandem cycle built for two and its S10 single-rider 10-speed model. Both models use the same seats and tires. Management has been informed that 2000 seats, 1000 gear assemblies (only the S10 requires a gear assembly), and 2400 tires are available next month for production. On the average, it takes two hours to produce a B2 and three hours to produce a S10 bicycle. The accounting department estimates that each B2 yields a profit of $40 and each S10 yields a profit of $100. Management has set the following prioritized goals:
Priority 1: Fulfill a contract for 400 B2 bicycles that it promised to deliver to vendors in Ocean
Priority 2: Produce at least 1000 total bicycles during the month
Priority 3: (1) Achieve at least $100,000 profit for the month, (2) use no more than 1600 labor- City, MD next month. Priority 4: The company is developing a new cycle, so it would like to have:
(1) at least 200 tires left hours during a month. Each $1000 short of $100,000 goal is considered 30 times as important as utilizing an extra labor-hour. over at the end of the month,
(2) at least 100 gear assemblies left over at the end of the month. Each leftover gear assembly is deemed twice as important as a leftover tire.
Management wants to determine the production schedule that best meets its prioritized objectives.
Explanation / Answer
Priority 1.
Total no of B2 bicycles to be produced = 400
Items required:
Seats = 400
Tires = 800
Time = 400*2= 800 hrs
Therefore total profit accounting to the sale of 400 B2 cycles = 400*40 = $16000
Priority 2:
Total number of bikes left for production = 1000-400 = 600
Total number of seats left = 1600
Total number of tires left = 1600
total number of Gears left = 1000
Number of tyres left after month = 200
So total number of Production = 1400/2 = 700
So if we make 700 production of s10 total inventory used would be:
Number of seats left = 900
Number of tires left = 200
Number of gears left = 300
Number of hours spent = 700*3 = 2100
Profit = 700*100 = $70000
Priority 3:
For a net profit of $100000 we need to have a net profit of $14000
So if we go for type S10 14000/100 = 140 = 420 h
In case of other partner (B2) = 14000/40 = 350 = 700 manpower
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