Company Z has the following historical information about sales for one of its hydraulic pump models. On
Question:
Company Z has the following historical information about sales for one of its hydraulic pump models.
On the other hand, the manufacturing process used by Company Z is sequential* and has the following characteristics:
* Sequential; in the sense that the output of Mi is the input of Mi+1.
** In any order; in the sense that they can be interchanged, e.g. MA -> MB or MB -> MA.
The company's operating costs are as follows:
Cost per final unit produced "defect-free": $100
Cost per final unit produced "with defects": $150
Cost per excess inventory (units "free of defects"): $50
Cost per inventory shortage ("defect-free" units): $200
Revenue per final "defect-free" unit produced and sold: $250
We have the following operating conditions:
- Any sequence of 3 machines can be used.
- Only one machine can be used once, within the same sequence of machines.
- You can work UP TO 720 hours per month.
- A "level production" type production strategy is followed.
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WHAT NEEDS TO BE DONE:
Establish the 1st and 2nd best machine sequence that allows company Z to obtain higher profits (profit = total revenue - total costs) for a hypothetical 5th year.
In both cases PROVE that both sequences meet the requirements of being the 1st and 2nd best sequences.
Expert Answer:
To determine the optimal machine sequence for Company Zwell consider the following aspects Predicted Sales Based on historical data the predicted sale... View the full answer
