The Strollers-to-Go Company makes lightweight umbrella-type strollers for three different groups of children. The TiniTote is designed
Question:
The Strollers-to-Go Company makes lightweight umbrella-type strollers for three different groups of children. The TiniTote is designed specifically for newborns who require extra neck support. The ToddleTote is for toddlers up to 30 pounds. Finally, the company produces a heavy-duty model called TubbyTote, which is designed to carry children up to 60 pounds. The stroller company is in the process of determining its production for each of the three types of strollers for the upcoming planning period. The marketing department has forecast the following maximum demand for each of the strollers during the planning period. TiniTote 180, TubbyTote 70, and ToddleTote 160. Strollers-to-Go sells TiniTotes for $63..75, TubbyTotes for $82.50, and ToddleTotes for $66. As a matter of policy, it wants to produce no less than 50% of the forecast demand for each product. It also wants to keep production of ToddleTotes to a maximum of 40% of total stroller production. The production department has estimated that the material costs for TiniTote, TubbyTote, and ToddleTote strollers will be $4, $6, and $5.50 per unit, respectively. The strollers are processed through fabrication, sewing and assembly workstations. The metal and plastic frames are made in the fabrication station. The fabric seats are cut and stitched together in the sewing station. Finally, the frames are put together with the seats in the assembly station. In the upcoming planning period, there will be 620 hours available in fabrication, where the direct labor cost is $8.50 per hour. The assembly station has 480 hours available and the direct labor cost is $8.75 per hour. The standard processing rate for TiniTotes is 3 hours in fabrication, 2 hours in sewing, and 1 hour in assembly. TubbyTotes requires 4 hours in fabrication, 1 hour in sewing and 3 hours in assembly, whereas ToddleTotes require 2 hours in each station.
a. How many strollers of each type should Strollers-to-Go make? What is the profit? Which constraints are binding?
b. How much labor time is being used in the fabrication, sewing, and assembly areas?
c. How much would Strollers-to-Go be willing to pay for an additional hour of fabrication time? For an additional hour of sewing time?
d. Is Strollers-to-Go producing any product at its maximum sales level? Is it producing any product at its minimum level?
Managerial Decision Modeling with Spreadsheets
ISBN: 978-0136115830
3rd edition
Authors: Nagraj Balakrishnan, Barry Render, Jr. Ralph M. Stair