A company operates a manufacturing plant that produces two products, A and B. The plant has the following capacity data: Design Capacity: 15,000 machine hours per month Effective Capacity: 12,000 machine hours per month Actual Output (Utilized Capacity): 10,000 machine hours per month Additionally, the plant produces Product A and Product B, with the following production data: Product Demand (Units) Processing Time (hours per unit) Contribution Margin ($ per unit) A 3,000 2.5 40 B 4,000 1.5 30 Calculate the plant’si.Capacity Utilization ii. Effective Capacity Utilization iii. Efficiency. Interpret the results. Compute the total machine hours required to meet full demand for both products. Determine whether the plant has sufficient capacity to meet full demand. If not, calculate the shortfall in machine hours. Using the contribution margin per unit of capacity, determine the optimal production plan under constrained capacity.

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter12: Queueing Models

Section: Chapter Questions

Problem 59P

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Question

A company operates a manufacturing plant that produces two products, A and B. The plant has the following capacity data:

Additionally, the plant produces Product A and Product B, with the following production data:

Product Demand (Units) Processing Time (hours per unit) Contribution Margin ($ per unit)

A 3,000 2.5 40

B 4,000 1.5 30

Calculate the plant’s
i.Capacity Utilization
ii. Effective Capacity Utilization
iii. Efficiency. Interpret the results.
Compute the total machine hours required to meet full demand for both products.
Determine whether the plant has sufficient capacity to meet full demand. If not, calculate the shortfall in machine hours.
Using the contribution margin per unit of capacity, determine the optimal production plan under constrained capacity.

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