Case 1: Western Chassis produces high-quality polished steel and aluminum sheeting and two lines of industrial chassis for the rack mounting of Internet routers, modems, and other telecommunications equipment. The contribution margin (contribution toward profit) for steel sheeting is $0.40 per pound and for aluminum sheeting is $0.60 per pound. Western earns $12 contribution on the sale of a Standard chassis rack and $15 contribution on a Deluxe chassis rack. During the next production cycle, Western can buy and use up to 25,800 pounds of raw unfinished steel either in sheeting or in chassis. Similarly, 20,400 pounds of aluminum are available. One standard chassis rack requires 16 pounds of steel and 8 pounds of aluminum. A Deluxe chassis rack requires 12 pounds of each metal. The output of metal sheeting is restricted only by the capacity of the polisher. For the next production cycle, the polisher can handle any mix of the two metals up to 4,000 pounds of metal sheeting. Chassis manufacture can be restricted by either metal stamping or assembly operations; no polishing is required. During the cycle no more than 2,500 total chassis can be stamped, and there will be 920 hours of assembly time available. The assembly time required is 24 minutes for the Standard chassis rack and 36 minutes for the Deluxe chassis rack. Finally, market conditions limit the number of Standard chassis racks sold to no more than 1,200 Standard and no more than 1,000 Deluxe. Any quantities of metal sheeting can be sold. Develop a Report for the following using the Solver application in Excel 7) An advertising agency has devised a marketing plan for the Western Chassis Company that will increase the market for Deluxe chassis. The plan will increase demand by 75 Deluxe chassis per month at a cost of $100 per month. Should Western adopt the plan? Briefly explain why. 8) Suppose that four more hours of chassis assembly time could be made available. How much would profit change? 9) Suppose next that Western’s marketing department proposes lowering the price for a standard chassis from $12 to $11.50 so that more can be sold (since there is slack under the demand constraint). Would the optimal solution change? Explain why, or why not. 10) If Western could obtain 1,000 pounds more of raw material (steel or aluminum), which should it procure? How much should they be willing to pay per pound for the steel or aluminum? Explain your answer.
Breakeven Analysis
Break Even Analysis is a term used in business, cost accounting and economics. It refers to a point where the total cost incurred becomes equal to the total revenue earned. Break Even Analysis determines the number of units to be sold to earn the revenue required to cover the total costs. Total cost is a sum total of fixed and variable costs.
Process analysis
The term process analysis can be defined as breakdown of production process into different phases that converts inputs into output. A series of routine activities are incorporated using organizational resources with a view to achieve operational excellence.
Case 1: Western Chassis produces high-quality polished steel and aluminum sheeting and two lines of
industrial chassis for the rack mounting of Internet routers, modems, and other telecommunications
equipment. The contribution margin (contribution toward profit) for steel sheeting is $0.40 per pound
and for aluminum sheeting is $0.60 per pound. Western earns $12 contribution on the sale of a
Standard chassis rack and $15 contribution on a Deluxe chassis rack. During the next production
cycle, Western can buy and use up to 25,800 pounds of raw unfinished steel either in sheeting or in
chassis. Similarly, 20,400 pounds of aluminum are available. One standard chassis rack requires 16
pounds of steel and 8 pounds of aluminum. A Deluxe chassis rack requires 12 pounds of each metal.
The output of metal sheeting is restricted only by the capacity of the polisher. For the next production
cycle, the polisher can handle any mix of the two metals up to 4,000 pounds of metal sheeting. Chassis
manufacture can be restricted by either metal stamping or assembly operations; no polishing is
required. During the cycle no more than 2,500 total chassis can be stamped, and there will be 920
hours of assembly time available. The assembly time required is 24 minutes for the Standard chassis
rack and 36 minutes for the Deluxe chassis rack. Finally, market conditions limit the number of
Standard chassis racks sold to no more than 1,200 Standard and no more than 1,000 Deluxe. Any
quantities of metal sheeting can be sold.
Develop a Report for the following using the Solver application in Excel
will increase the market for Deluxe chassis. The plan will increase demand by 75 Deluxe
chassis per month at a cost of $100 per month. Should Western adopt the plan? Briefly
explain why.
8) Suppose that four more hours of chassis assembly time could be made available.
How much would profit change?
standard chassis from $12 to $11.50 so that more can be sold (since there is slack under the
demand constraint). Would the optimal solution change? Explain why, or why not.
should it procure? How much should they be willing to pay per pound for the steel or
aluminum? Explain your answer.
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