What monthly production schedule would be best for bakker

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Reference no: EM13877533

Theory of Constraints Bakker Industries sells three products (611, 613, and 615) that it manufac- tures in four departments. Both labor and machine time are applied to products in each of the four departments. The machine-processing and labor skills required in each department prohibit switch- ing either machines or labor from one department to another. However, Bakker has a good supply of both full-time and part-time labor and does not expect hiring or retention of employees to be a problem. Because of the availability of part-time labor, Bakker considers labor a variable cost and includes it in the calculation of throughput margin.

Bakker's management is planning its production schedule for the next several months. Some machines will be out of service for extensive overhauling. Available machine times by department for each of the next six months are as follows:

 Department

1

2

3

4

Normal machine capacity in machine-hours

3,500

3,500

3,000

3,500

Capacity of machines being repaired, in machine-hours

500

400

300

200

Available capacity in machine-hours

3,000

3,100

2,700

3,300

Labor and machine specifications per unit of product follow:

Product

Labor and Machine Time

1

2

3

4

611

Direct labor-hours

2

3

3

1


Machine-hours

2

1

2

2

613

Direct labor-hours

1

2

0

2


Machine-hours

1

1

0

2

615

Direct labor-hours

2

2

1

1


Machine-hours

2

2

1

1

The Sales Department's forecast of product demand over the next six months is as follows:

Product              Monthly Sales

611                   500 units
613                   400 units
615                   1,000 units

Bakker's inventory levels will not increase or decrease during the next six months. The unit price and cost data valid for the next six months follow:

Product

611

613

615

Price

$196

$123

$167

Direct materials

7

13

17

Direct labor



Department 1

12

6

12

Department 2

21

14

14

Department 3

24

-

16

Department 4

9

18

9

Variable overhead

27

20

25

Fixed overhead

15

10

32

Variable selling

3

2

4

Required

1. Determine whether Bakker can meet the monthly sales demand for the three products. What department is a constraint, if any?

2. What monthly production schedule would be best for Bakker Industries? Assume that Bakker includes all variable manufacturing costs in calculating throughput.

Reference no: EM13877533

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