Explain principles for determining product mix, Operation Management

The senior management at Canine Kernels Company CKC is concerned with the existing capacity limitations so they want to accept the mix of orders that maximizes the company's profits. Traditionally, CKC has utilized a method whereby decisions are made to produce as much of the product with the highest contribution margin as possible (up to the limit of its demand), followed by the next highest contribution margin product, and so on until no more capacity is available. Because capacity is limited, choosing the proper product mix is crucial. Troy Hendrix, the newly hired production supervisor, is an avid follower of the theory of constraints philosophy and the bottleneck method of scheduling. He believes that profitability can indeed be approved if bottleneck resources are exploited to determine product mix.

A, What is the profit if the traditional contribution margin method is used for determining CKC's product mix?

B. What is the profit if the bottleneck method advocated by Troy is used for selecting the product mix?

C. Calculate the profit gain, both in absolute dollars as well as in absolute dikkars as well as in terms of percentages gains, by tying TOC principles for determining product mix.

Posted Date: 2/26/2014 12:30:20 AM | Location : United States







Related Discussions:- Explain principles for determining product mix, Assignment Help, Ask Question on Explain principles for determining product mix, Get Answer, Expert's Help, Explain principles for determining product mix Discussions

Write discussion on Explain principles for determining product mix
Your posts are moderated
Related Questions
Consider a $1,000 par value, 7% annual coupon bond. The bond matures in 9 years. Assuming the bonds required return is 10%, what is its current yield? (Semi-annually compounding)

Standard Deviation - Statistical Aspects of Variability Although the range gives an indication of variability, its value is solely determined by two measurements, the largest

1) C-Spec, Inc., is attempting to determine whether an existing machine is capable of milling an engine part that has a key specification of 4+6 .003 inches. After a trial run o

When a value of a variable(like the possible number of people who might be interested in your product) is said to have a normal distribution, how do the highest and lowest possible

On day 51, a project has an earned value of $600, an actual cost of $650, and a planned cost of $560. Compute the SV, CV, and CPI for the project. What is your assessment of the he

1. What are the steps in the method study procedure?  Answer: Select, record, examine, develop, install, maintain.

Activities Relating to Production System Designing Decision relating to the production system design is the firm and foremost activity of the production management. This activi

Explain the 5-S practice for improving both the physical and thinking environment of an organisation. The 5-S practice is an approach to achieving an organised, clean and stand

Ski Boards, Inc., wants to enter the market quickly with a new finish on its ski boards. It has three choices: (a) refurbish the old equipment at a cost of $800, (b) make major mod

Explain why it is important to carry out a rough-cut capacity planning check on critical resources before proceeding with the development of the final master production schedule