Question: The extracted text from the second page reads: - - - * * Lorex Pharmaceuticals * * - Carter Blakely, manager of quality assurance for

The extracted text from the second page reads:---**Lorex Pharmaceuticals**- Carter Blakely, manager of quality assurance for Lorex Pharmaceuticals, was pleased with the progress in producing the companys new product, Linatol. - Linatol, developed and patented by Lorex years ago, was intended for treating high blood pressure. After eight years of product testing, including clinical trials, the FDA approved Linatol only a week ago. - The manufacturing division prepared the production line over the past week, and one-shift production was scheduled to start on Monday. - The marketing division decided that the initial offering of Linatol would be in sealed 10-ounce bottles, packaged in cases of 12, with a wholesale price set at $186 per case. - Blakely's remaining task was to set a target amount for filling the 10-ounce bottles.---**The Manufacturing of Linatol:**- Linatol was blended in 5,000-liter batches with a confidential process. It was bottled on a semiautomatic filling line that included an automatic filling mechanism for liquids, a capping and sealing component, and an electronic sensor to measure the liquid volume in each bottle. - When properly filled, the bottles were conveyed to a packaging machine, which loaded and sealed cartons of 12 bottles each. - The chosen line for Linatol could fill and package 1,000 bottles per hour. However, due to delays and setup requirements, the expected production rate was 500 cases per eight-hour shift. - This slower production rate was acceptable because Linatol was produced in relatively low volumes, and the slower line was not needed for any other product.- The entire line was operated by two employees who earned $12.80 per hour, including fringe benefits. Every product incurred an overhead burden to cover the expense of maintaining an antiseptic filling room.---Let me know if you'd like further analysis or assistance with these documents!The extracted text from the first page reads:---**Page 2:**- Overhead was charged at a rate of $89.50 per hour. The cost of materials used by the filling line (bottles, caps, seals, labels, and packaging) was estimated to be $1.10 per bottle.- Bottles not filled to the 10-ounce requirement were identified by an electronic eye and directed for special handling. A team of filling-room attendants labeled underfilled bottles as seconds and hand-packaged them for sale to secondary markets (such as government hospitals) at 80% of the normal price of $186 per case. - Each attendant could label and package about 12 cases per hour and earned $8.50 per hour, including fringe benefits.- The initial production of Linatol was scheduled for one 40-hour-per-week shift, with batch blending scheduled accordingly.---**The Filling-Line Test:**- Prior to production, the filling line was tested with an inexpensive liquid and then the product itself. Once perfected, samples from 144 bottles of Linatol were measured. - The filling mechanism was set to fill bottles to 10.2 fluid ounces. - The consistency of the amounts in the 144 test bottles demonstrated that the fill mechanism could be set to any target.---**Setting the Fill Target:**- Carter Blakely had to determine the fill target. The 10.2-ounce target was arbitrary with no economic justification. - A rule used was to set the target one standard deviation above the required amount. - However, this rule, though statistically justified, often ignored economic considerations, leading to buffer storage areas for underfilled bottles becoming clogged and temporarily halting production.---I will now extract the text from the second image.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!