TOC, Internal and External Constraints

Bountiful Manufacturing produces two types of bike frames (Frame X and Frame Y). Frame X passes through four processes: cutting, welding, polishing, and painting. Frame Y uses three of the same processes: cutting, welding, and painting. Each of the four processes employs 10 workers who work eight hours each day. Frame X sells for $40 per unit, and Frame Y sells for $55 per unit. Materials is the only unit-level variable expense. The materials cost for Frame X is $20 per unit, and the materials cost for Frame Y is $25 per unit. Bountiful's accounting system has provided the following additional information about its operations and products:

Resource Name	Resource Available	Frame X Resource Usage per Unit	Frame Y Resource Usage per Unit
Cutting labor	4,800 minutes	15 minutes	10 minutes
Welding labor	4,800 minutes	15 minutes	30 minutes
Polishing labor	4,800 minutes	15 minutes
Painting labor Market demand:	4,800 minutes	10 minutes	15 minutes
Frame X	200 per day	One unit
Frame Y	100 per day		One unit

Bountiful's management has determined that any production interruptions can be corrected within two days.

Required:

1. Assuming that Bountiful can meet daily market demand, compute the potential daily profit.

$fill in the blank 1 potential daily profit

Now, compute the minutes needed for each process to meet the daily market demand.

Cutting	fill in the blank 2 minutes
Welding	fill in the blank 3 minutes
Polishing	fill in the blank 4 minutes
Painting	fill in the blank 5 minutes

Can Bountiful meet daily market demand?

No

If not, where is the bottleneck?

Welding

Can you derive an optimal mix without using a graphical solution?

Yes

2. Identify the objective function and the constraints. Then select the graph that illustrates the constraints facing Bountiful.

a.		b.
c.		d.

Correct answer is a .

Determine the optimal mix and the maximum daily contribution margin (throughput). If a value is zero, enter "0" as your answer.

Corner Point	X-Value	Y-Value	Daily Contribution Margin
A	fill in the blank 10	fill in the blank 11	$fill in the blank 12
B	fill in the blank 13	fill in the blank 14	$fill in the blank 15
C	fill in the blank 16	fill in the blank 17	$fill in the blank 18
D	fill in the blank 19	fill in the blank 20	$fill in the blank 21
E	fill in the blank 22	fill in the blank 23	$fill in the blank 24

3. Consider the way a drum-buffer-rope system would work for Bountiful. Which process is the drummer? Welding .

4. Suppose that the Engineering Department has proposed a process design change that will increase the polishing time for Frame X from 15 to 23 minutes per unit and decrease the welding time from 15 minutes to 10 minutes per unit (for Frame X). The cost of process redesign would be $10,000. Evaluate this proposed change.

Daily contribution margin increases by $fill in the blank 27.

What step in the TOC process does this proposal represent?

Step 3