You have just started working for Modern Chair, a new organization that uses a modern, automated...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You have just started working for Modern Chair, a new organization that uses a modern, automated approach to the manufacture of a variety of chairs. Using computer-assisted design specifying and ordering materials and scheduling man- ual and machine activities, every chair can be unique, and Modern Chair can offer individual design on demand. Modern Chair controls costs, which are lower than those of competitors who have less automation and less ability to efficiently produce small batches. Nevertheless, the success of the company has led to a problem. Currently, with the economy in what looks to be a temporary boom, there is a shortage of capacity. There are no plans to expand production capacity to meet temporary excess demand. The president asked you for recom- mendations for making the best use of limited production capacity. Your rec- ommendations are to facilitate profit maximization. In your investigation, you realize that there is not much in the way of information on which to base the recommendations. The organization has lit- tle history, and the president has personally made all important decisions. You note, however, that besides the design department that has unlimited capacity, there are two production departments: the first department assembles the chairs, while the second does the finishing. Although there are 252 differ- ent types of chairs if all styles and finishes are considered, Modern Chair divides them into two types, upholstered and straight back. Using this conceptualization, you allocate production costs according to assembly or finishing. Within each department, you further divide the costs according to upholstered or straight back chairs. You then take the cost for each product category in each department and run simple regressions, and you get the results seen in Exhibit 1. Each department's total available hours are 3,920 hours a year, i.e., 16 hours a day for five days a week for 49 weeks a year. The assembly depart- ment runs five identical lines. The yearly capacity is 19,600 operating hours. The finishing department runs four lines for 15,680 hours of available time. An average upholstered chair sells for $147, and the average straight back chair sells for $76. Sales of straight back chairs are unlikely to exceed 25,000 at that price, while that price will restrict upholstered chairs to 25,000. There CASE 29: MODERN CHAIR Modern Chair occupied its current facilities four years ago. The assembly department cost $927,000 for plant and equipment. The finishing department's plant and equipment cost $554,000. About 80 percent was for equipment, while the remaining 20 percent was for the land and buildings. Since then, the capac- ities of the two departments have increased about five or six percent a year. The managers and employees found ways to increase efficiency and effective- ness. In examining the non-manufacturing costs, you find that they are all fixed except the five percent sales commission paid on the sales price of each chair. Required You have just finished a nice lunch at Spartans and are seeing the President of Modern Chair within an hour. Linear programming comes to your mind as being a suitable tool. What analysis and recommendation would you provide? Use the case approach. is sufficient capacity in the assembly department, but not in the finishing department. For each department, the standard hours in production needed to produce the chairs are as follows: Assembly Finishing Upholstered 0.75 0.45 Straight Back 0.50 0.75 CASE 29: MODERN CHAIR Modern Chair occupied its current facilities four years ago. The assembly department cost $927,000 for plant and equipment. The finishing department's plant and equipment cost $554,000. About 80 percent was for equipment, while the remaining 20 percent was for the land and buildings. Since then, the capac- ities of the two departments have increased about five or six percent a year. The managers and employees found ways to increase efficiency and effective- ness. In examining the non-manufacturing costs, you find that they are all fixed except the five percent sales commission paid on the sales price of each chair. Required You have just finished a nice lunch at Spartans and are seeing the President of Modern Chair within an hour. Linear programming comes to your mind as being a suitable tool. What analysis and recommendation would you provide? Use the case approach. You have just started working for Modern Chair, a new organization that uses a modern, automated approach to the manufacture of a variety of chairs. Using computer-assisted design specifying and ordering materials and scheduling man- ual and machine activities, every chair can be unique, and Modern Chair can offer individual design on demand. Modern Chair controls costs, which are lower than those of competitors who have less automation and less ability to efficiently produce small batches. Nevertheless, the success of the company has led to a problem. Currently, with the economy in what looks to be a temporary boom, there is a shortage of capacity. There are no plans to expand production capacity to meet temporary excess demand. The president asked you for recom- mendations for making the best use of limited production capacity. Your rec- ommendations are to facilitate profit maximization. In your investigation, you realize that there is not much in the way of information on which to base the recommendations. The organization has lit- tle history, and the president has personally made all important decisions. You note, however, that besides the design department that has unlimited capacity, there are two production departments: the first department assembles the chairs, while the second does the finishing. Although there are 252 differ- ent types of chairs if all styles and finishes are considered, Modern Chair divides them into two types, upholstered and straight back. Using this conceptualization, you allocate production costs according to assembly or finishing. Within each department, you further divide the costs according to upholstered or straight back chairs. You then take the cost for each product category in each department and run simple regressions, and you get the results seen in Exhibit 1. Each department's total available hours are 3,920 hours a year, i.e., 16 hours a day for five days a week for 49 weeks a year. The assembly depart- ment runs five identical lines. The yearly capacity is 19,600 operating hours. The finishing department runs four lines for 15,680 hours of available time. An average upholstered chair sells for $147, and the average straight back chair sells for $76. Sales of straight back chairs are unlikely to exceed 25,000 at that price, while that price will restrict upholstered chairs to 25,000. There CASE 29: MODERN CHAIR Modern Chair occupied its current facilities four years ago. The assembly department cost $927,000 for plant and equipment. The finishing department's plant and equipment cost $554,000. About 80 percent was for equipment, while the remaining 20 percent was for the land and buildings. Since then, the capac- ities of the two departments have increased about five or six percent a year. The managers and employees found ways to increase efficiency and effective- ness. In examining the non-manufacturing costs, you find that they are all fixed except the five percent sales commission paid on the sales price of each chair. Required You have just finished a nice lunch at Spartans and are seeing the President of Modern Chair within an hour. Linear programming comes to your mind as being a suitable tool. What analysis and recommendation would you provide? Use the case approach. is sufficient capacity in the assembly department, but not in the finishing department. For each department, the standard hours in production needed to produce the chairs are as follows: Assembly Finishing Upholstered 0.75 0.45 Straight Back 0.50 0.75 CASE 29: MODERN CHAIR Modern Chair occupied its current facilities four years ago. The assembly department cost $927,000 for plant and equipment. The finishing department's plant and equipment cost $554,000. About 80 percent was for equipment, while the remaining 20 percent was for the land and buildings. Since then, the capac- ities of the two departments have increased about five or six percent a year. The managers and employees found ways to increase efficiency and effective- ness. In examining the non-manufacturing costs, you find that they are all fixed except the five percent sales commission paid on the sales price of each chair. Required You have just finished a nice lunch at Spartans and are seeing the President of Modern Chair within an hour. Linear programming comes to your mind as being a suitable tool. What analysis and recommendation would you provide? Use the case approach.
Expert Answer:
Answer rating: 100% (QA)
ANS WER I recommend using linear programming to maximize prof... View the full answer
Related Book For
Posted Date:
Students also viewed these general management questions
-
You have just started working for a financial planning firm and have been asked to analyze the performance and risk of the following 10 stocks to decide on the optimal portfolio for your client: The...
-
The following data relate to the manufacture of a standard product during the month of March 2010: Raw materials: Opening stock................30,000 Purchases......................70,000 Closing...
-
You have just started a business and want your new employees to be well informed about capital budgeting. Requirement 1. Match each definition with its capital budgeting method. METHODS 1. Rate of...
-
Pieman Products Ltd makes road trailers to the precise specifications of individual customers. The following are predicted to occur during the forthcoming year, which is about to start: All direct...
-
Describe some of the disadvantages that freed slaves had as they tried to blend into mainstream society. Explain factors that could cause some former slaves to succeed while others would have great...
-
The College Board provided comparisons of SAT scores based on the highest level of education attained by the test taker's parents. A research hypothesis was that students whose parents had attained a...
-
Find a video on deposition preparation that is available online. As a paralegal, how can you assist in preparing a client for deposition?
-
Sue Merando is the owner of Merandos Pizza. Merandos is operated strictly on a carryout basis. Customers pick up their orders at a counter where a clerk exchanges the pizza for cash. While at the...
-
Question 4 Suppose there are 6 white and 9 black balls in an urn. Pick 5 balls without replacement. Part a) What is the probability that you pick exactly 2 white and 3 black balls (in any order)?...
-
During the month of November, the following transactions occurred. Assignment 1. Record the following transactions in the general journal and post them to the general ledger. 2. Prepare a trial...
-
how does risk-free security and the market portfolio determine the level of market risk
-
On January 1 , 2 0 2 3 , Fisher Corporation purchased 4 0 percent ( 7 2 , 0 0 0 shares ) of the common stock of Bowden, Incorporated, for $ 9 9 2 , 0 0 0 in cash and began to use the equity method...
-
The income statement and balance sheet of Sheng Siong Group Ltd ("Sheng Siong"), one of Singapore's largest retailers with 67 stores located across the island. over the last three years are provided...
-
Golf Academy, Incorporated, provides private golf lessons. Its unadjusted trial balance at December 3 1 , 2 0 2 1 , follows, along with information about selected accounts. Account Names Debit...
-
Identify the major purpose of cost accounting. Know the two basic types of cost accounting systems. Know the important features of a job order cost system. Know the steps in the flow of costs. Know...
-
A manufacturing company reports the following for the period: Inventories Beginning Ending Raw materials $ 1 8 , 1 2 0 $ 1 2 , 1 0 0 Work in process 9 , 5 0 0 1 1 , 3 0 0 Finished goods 1 2 , 5 6 0...
-
3) The following table shows individual player statistics for 3 members of the San Jose Sharks during the 2016-2017 NHL season. Player Brent Burns Joe Pavelski Patrick Marleau Shots on Goals Goal 320...
-
Don Griffin worked as an accountant at a local accounting firm for five years after graduating from university. Recently, he opened his own accounting practice, which he operates as a corporation....
-
In mid-2012, Apple had cash and short-term investments of $27.65 billion, accounts receivable of $14.30 billion, current assets of $51.94 billion, and current liabilities of $33.06 billion. a. What...
-
You have received two job offers. Firm A offers to pay you $85,000 per year for two years. Firm B offers to pay you $90,000 for two years. Both jobs are equivalent. Suppose that firm As contract is...
-
Find online the annual 10-K report for Peets Coffee and Tea (PEET) for fiscal year 2011 (filed in January 2012). Answer the following questions from their income statement: a. What were Peets...
-
Derive coefficients \[ C_{j k}=\frac{2}{\sqrt{ho a b}} \] using the normalization procedure given for \(W_{j k}\) by Equation 8.40. == Wik(x, y) Cik sin aja sin Yky, or Wjk (x, y) =Cjk sin x : sin...
-
Show how the parameters \(k_{i j}\) and \(m_{i j}\) are derived.
-
Derive Equations 8.54. m =mydx = = mL 5 mL = m12 myydx= m21 mamy dx = k11=EIYdx= 6 mL 7 (8.54) 4EI 6EI k12 = SEIYYdx= -k21 12EI k22=EIYdx
Study smarter with the SolutionInn App