1. (40 points) PQ Problem: Answer any 40 points of questions from the list below.Consider a plant consisting of two key resources that make three products, P, Q, and R, details of which are provided below. Both resources A and B are needed to make each unit of a product. There are 3200 minutes available each week (the planning period) on each resource. Labor is treated as a fixed salary cost and accounted for in relevant fixed overhead which amounts to $6000 / week.

ProductPQRUnit Selling Price120110130Unit Direct Material Cost607085Max. Demand (units / week)300150400Unit Time Required on Resource A4 minutes / unit5 minutes / unit3 minutes / unitUnit Time Required on Resource B5 minutes / unit4 minutes / unit3 minutes / unit

1. (10 points)Bottleneck: Which resource A or B is the bottleneck? Explain by showing relevant calculations / approach used or explain the logic. Note: Bottleneck is **not** a product like P, Q, R.
2. (10 points)Prioritization: Considering the most-restrictive (bottleneck) resource, calculate the bottleneck ratio = unit profit per unit of bottleneck resource consumed and identify which product will receive highest priority. Is this prioritization the same as by the unit profit method?
3. (10 points)Production Plan: Determine the production plan and the resulting weekly profitcorresponding to the bottleneck ratio approach (prioritization from your answer to part b above). Here production plan specifies the number of units of P, Q, R produced each week) and the relevant weekly costs include raw material, labor, and machine-time operating cost.
4. (10 points) Resource Addition: Suppose it is possible to procure extra resources (time) week at a net 50% overhead price premium assume that the weekly overhead is split evenly across the two resources and is proportional to the time available. Would you procure extra resources each week, how much of which resources, why or why not?
5. (10 points) Time-Frame: The above questions deal with weekly operational planning decisions what tactical or strategic actions would you consider for improving longer-term (say quarterly) profitability? For each action option listed, mention what data will be impacted and how.
6. (10 points) Lessons / Modifications: List three key lessons from this (Goldratts) PQ problem exercise. How might you modify the PQ problem to make it potentially more interesting / relevant / insightful (by addressing weaknesses of the PQ problem)?