EBK OM
6th Edition
ISBN: 9781305888210
Author: Collier
Publisher: YUZU
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Chapter 13, Problem 6PA
Summary Introduction
Interpretation:
Comparison of costs of level and chase demand production plans.
Concept Introduction:
Chase strategy is a strategy used by company to meet uncertain demands of customers. Company produces so much goods that there is enough inventory for end users. This strategy is used usually by companies to optimally reduce cost of inventory.
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Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by
5555%
in the last year. On far too many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only production change that will be made in order to meet the increased
demand.
The bakery currently makes
1,800
loaves per month. Employees are paid
$8
per hour. In addition to the labor cost, Charles also has a constant utility cost per month of
$800
and a per loaf ingredient cost of
$0.35
Current multifactor productivity for 640 work hours per month =0.27loaves/dollar (round your response to three decimal places).
CarCity is a big retailer for car parts and accessories. The store stocks different types and sizes of car tire. One of the best selling tires is the Tiger Model R125, which is currently purchased from a factory in Indonesia. An analysis of the purchasing operation shows that approximately 3 labor hours are required to process a purchase order, regardless of the quantity purchased. Salaries in the purchasing Department average OMR 12 per hour, including employee benefits. In addition, a detailed analysis of 15 previous purchase orders showed that OMR 132 was spent on telephone, paper, and other consumables directly related to the ordering process . Shipping cost from Indonesia is OMR 230 for a container. A container has a capacity of 800 tires. The lead time for shipments from Indonesia is 15 days. Finally, CarCity’s financial analysts established a holding cost of 20% for this type of tire. The annual demand for the R125 tire is constant at a rate of 8400 units. The store purchases…
CarCity is a big retailer for car parts and accessories. The store stocks different types and sizes of car tire. One of the best selling tires is the Tiger Model R125, which is currently purchased from a factory in Indonesia. An analysis of the purchasing operation shows that approximately 2 labor hours are required to process a purchase order, regardless of the quantity purchased. Salaries in the purchasing Department average OMR 15 per hour, including employee benefits. In addition, a detailed analysis of 20 previous purchase orders showed that OMR 132 was spent on telephone, paper, and other consumables directly related to the ordering process (see guidelines above to obtain value of 132). Shipping cost from Indonesia is OMR 250 for a container. A container has a capacity of 800 tires. The lead time for shipments from Indonesia is 15 days. Finally, CarCity’s financial analysts established a holding cost of 30% for this type of tire. The annual demand for the R125 tire is constant at…
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- CarCity is a big retailer for car parts and accessories. The store stocks different types and sizes of car tire. One of the best selling tires is the Tiger Model R125, which is currently purchased from a factory in Indonesia. An analysis of the purchasing operation shows that approximately 2 labor hours are required to process a purchase order, regardless of the quantity purchased. Salaries in the purchasing Department average OMR 15 per hour, including employee benefits. In addition, a detailed analysis of 20 previous purchase orders showed that OMR 132 was spent on telephone, paper, and other consumables directly related to the ordering process (see guidelines above to obtain value of 132). Shipping cost from Indonesia is OMR 250 for a container. A container has a capacity of 800 tires. The lead time for shipments from Indonesia is 15 days. Finally, CarCity’s financial analysts established a holding cost of 30% for this type of tire. The annual demand for the R125 tire is constant at…arrow_forwardOld Pueblo Engineering Contractors creates six-month “rolling” schedules, which are recomputed monthly. For competitive reasons (it would need to divulge proprietary design criteria, methods, and so on), Old Pueblo does not subcontract. Therefore, its only options to meet customer requirements are (1) work on regular time; (2) work on overtime, which is limited to 30 percent of regular time; (3) do customers’ work early, which would costan additional $5 per hour per month; and (4) perform customers’ work late, which would cost an additional $10 per hour per month penalty, as provided by their contract. Old Pueblo has 25 engineers on its staff at an hourly rate of $30. The overtime rate is $45. Customers’ hourly requirements for the six months from January to June are January 5000 February 4000 March 6000 April 6000 May 5000 June 4000 Develop an aggregate plan using a spreadsheet. Assume 20 working days in each month. 12. Alan Industries is expanding its product line to include three…arrow_forwardCharles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 55% in the last year. On far too many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only production change that will be made in order to meet the increased demand. The bakery currently makes 1,600 loaves per month. Employees are paid $ 8 per hour. In addition to the labor cost, Charles also has a constant utility cost per month of $ 850 and a per loaf ingredient cost of $ 0.35. Part 2 Current multifactor productivity for 640 work hours per month = enter your response here loaves/dollar (round…arrow_forward
- Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 55% in the last year. On far too many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only thing to be changed. The bakery currently makes 1,800 loaves per month. The pay will be $8 per hour for employees and each employee works 160 hours per month. Charles Lackey can also improve the yield by purchasing a new blender. The new blender will mean an increase in his investment. This new blender will mean an increase in his costs of $125 per month, but he will achieve the same new output (an increase to 2,790.00) as the…arrow_forwardCharles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 35% in the last year. On far too many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only production change that will be made in order to meet the increased demand. The bakery currently makes 1,600 loaves per month. Employees are paid $8 per hour. In addition to the labor cost, Charles also has a constant utility cost per month of $700 and a per loaf ingredient cost of $0.35. Current multifactor productivity for 640 work hours per month= loaves/dollar (round your response to three decimal places).arrow_forwardCharles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 35% in the last year. On far too many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only thing to be changed. The bakery currently makes 1,600 loaves per month. The pay will be $8 per hour for employees and each employee works 160 hours per month. Charles Lackey can also improve the yield by purchasing a new blender. The new blender will mean an increase in his investment. This new blender will mean an increase in his costs of $100 per month, but he will achieve the same new output (an increase to…arrow_forward
- Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 35% in the last year. On far too many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only production change that will be made in order to meet the increased demand. The bakery currently makes 1,500 loaves per month. Employees are paid $88 per hour. In addition to the laborcost, Charles also has a constant utility cost per month of $800 and a per loaf ingredient cost of $0.35 Current multifactor productivity for 640 work hours per month = loaves/dollar (round your response to three decimal places).arrow_forwardCharles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 25% in the last year. On far too many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only thing to be changed. (Productivity remains the same.) (Hint: Each worker works 160 hours per month.) If the bakery currently makes 1,500 loaves per month with a labor productivity of 2.344 loaves per labor hour, then Lackey will need to add 4 worker(s) to meet the increased demand (recall that each worker works 160 hours per month and round your response up to the next whole number).arrow_forwardCharles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 25%in the last year. On far too many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only thing to be changed. The bakery currently makes 1,600 loaves per month. The pay will be $8per hour for employees and each employee works 160 hours per month. Charles Lackey can also improve the yield by purchasing a new blender. The new blender will mean an increase in his investment. This new blender will mean an increase in his costs of $150 per month, but he will achieve the same new output (an increase to 2,000.00)…arrow_forward
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