Chapter 5, Problem 11P

Cooper River Glass Works (RGW) produces four different models of desk lamps as shown in Figure 5.15. The operations manager knows that total monthly demand exceeds the capacity available for production. Thus, she is interested in determining the product mix which will maximize profits. Each model’s price, routing, processing times, and material cost are provided in Figure 5.15. Demand next month is estimated to be 200 units of model Alpha, 250 units of model Bravo, 150 units of model Charlie, and 225 units of model Delta. CRGW operates only one 8-hour shift per day and is scheduled to work 20 days next month (no overtime). Further, each station requires a 10 percent capacity cushion.

1. Which station is the bottleneck?
2. Using the traditional method, which bases decisions solely on a product’s contribution to profits and overhead, what is the optimal product mix and what is the overall profitability?
3. Using the bottleneck-based method, what is the optimal product mix and what is the overall profitability?