Case Problem 1 Chapter 3
MEMO
TO: Dr. Norman E. Pence
FROM: Mary Nicole Porter
DATE: September 11, 2013
SUBJECT: Chapter 2 Case Problem 1: Workload Balancing
Digital Imaging: Balancing Photo Printer Production
Digital Imaging, a company that produces photo printers, recently introduced two models of printers into the average consumer market: the DI-910, and the more sophisticated and faster DI-950. Analysis shows that management can expect profit contributions of $42 for each DI-910 and $87 for each DI-950 produced. Both models are assembled in an automated plant using two production lines. Production line 1 allocates 3-minutes per model DI-910 and 6-minutes per model DI-950 produced for assembly. Line 2 allocates 4-minutes to each DI-910 and 2-minutes to each DI-950 produced for packaging and testing. Lines 1 and 2 are only in operation for one 8-hour shift per day.
Task 1 – Maximizing Total Profit Contribution with Time Constraints
In order to maximize the total profit contribution for an 8-hour shift, it is recommended to produce 80 model DI-950 printers and zero (0) model DI-910 printers. This would provide a total profit contribution of approximately $6960 per shift. Management may disagree with these production recommendations, because zero (0) production of model DI-910 printers may not sound appealing. The reasoning for this may be that the DI-910 printers are the less sophisticated version of the two models and may be in higher demand by the consumer. Perhaps they are priced lower, or have more practical applications, which prevail to a wider market. Also, producing a zero amount of any product would lead to raw materials used in making that product (depending on what type of inventory system they use) building up in inventory, not being consumed in production, and creating a cost accounting problem.
Task 2 – Maximizing Total Profit Contribution with Demand Constraints
If management were to add a demand requirement to these existing time
TO: Dr. Norman E. Pence
FROM: Mary Nicole Porter
DATE: September 11, 2013
SUBJECT: Chapter 2 Case Problem 1: Workload Balancing
Digital Imaging: Balancing Photo Printer Production
Digital Imaging, a company that produces photo printers, recently introduced two models of printers into the average consumer market: the DI-910, and the more sophisticated and faster DI-950. Analysis shows that management can expect profit contributions of $42 for each DI-910 and $87 for each DI-950 produced. Both models are assembled in an automated plant using two production lines. Production line 1 allocates 3-minutes per model DI-910 and 6-minutes per model DI-950 produced for assembly. Line 2 allocates 4-minutes to each DI-910 and 2-minutes to each DI-950 produced for packaging and testing. Lines 1 and 2 are only in operation for one 8-hour shift per day.
Task 1 – Maximizing Total Profit Contribution with Time Constraints
In order to maximize the total profit contribution for an 8-hour shift, it is recommended to produce 80 model DI-950 printers and zero (0) model DI-910 printers. This would provide a total profit contribution of approximately $6960 per shift. Management may disagree with these production recommendations, because zero (0) production of model DI-910 printers may not sound appealing. The reasoning for this may be that the DI-910 printers are the less sophisticated version of the two models and may be in higher demand by the consumer. Perhaps they are priced lower, or have more practical applications, which prevail to a wider market. Also, producing a zero amount of any product would lead to raw materials used in making that product (depending on what type of inventory system they use) building up in inventory, not being consumed in production, and creating a cost accounting problem.
Task 2 – Maximizing Total Profit Contribution with Demand Constraints
If management were to add a demand requirement to these existing time