A furniture store produces photo frames on its own workshop. Jassim the manager of the store noticed
Question:
A furniture store produces photo frames on its own workshop. Jassim the manager of the store noticed that the monthly demand is very high it can be any value between 1000 and 2000. He knows that the workshop can produce up to 1000 photo frames per month during the regular shift. The workshop cannot meet the high demand, especially if the demand is more than the maximum number of units can be produced during the regular shift (1000 units).
Jassim decided to accept backorders to meet the high demand. Therefore, he decided to produce 1000 photo frames every month during the regular shift and purchase the remaining photo frames from a local supplier. Thus, If the demand is more than the production; Then the purchased units will be equal to the remaining photo frames; Otherwise, no units will be purchased from the supplier.
The price per photo frame is $ 35.60, the material cost of each unit produced is $12.25, the labor cost per unit produced is $10.00 and the fixed cost is $1,500.00.
The following are the supplier's purchase prices:
| ||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||
Question: Jassim needs to take your advice to help him to choose which supplier is the best to purchase the remaining units when the demand is more than the production.
- You are required to help the manager to prepare a simulation of size 50 to calculate the profit when the remaining photo frames are purchased from supplier#1?
- You are required to help the manager to prepare a simulation of size 50 to calculate the profit when the remaining photo frames are purchased from supplier#2?
- Create a summary report to help Jassim to choose among the two suppliers. Use these bins for the profit ($11,000, $14,000, $17,000, $20,000, $23,000, $26,000).
Expert Answer:
