Giberson Glass Studio
Giberson’s Glass Studio
Giberson is a skilled glassblower facing financial difficulties in his business. His resources are draining out quickly due to the following reasons –
Lack of proper bookkeeping following his divorce, since his wife used to take care of the activity
He has no knowledge which of his 4 items – glasses, paper weights, tumblers and vases – is profitable
He is in dire need of a better pricing strategy to maintain profits after accounting for costs and his wages
Looking at the available data, Giberson seems to be under-utilizing several of his resources, namely raw materials and time in addition to inefficiently pricing the products. Let us look at each of these factors separately.
Raw Materials
Let us calculate the total weight of raw materials used to produce the 4 items and compare that with the total weight of raw materials available
Weight / piece
(lbs)
Patterned glasses
0.5
Paperwights
0.9
Wrapped tumblers
0.5
Vases
0.6
Item
Weekly
Production
19
10
32
8
Total Weight
(lbs)
9.5
9
16
4.8
39.3
The total weight of raw material used = 39.3 lbs.
The total weight of raw material scrapped = 50 lbs.
Batch size available = 200 lbs.
Percentage utilization = (39.3 + 50)/200 = 45%
Cost/ batch = $21.42.
Cost/year = $21.42*40 = $856.80
Recommendation – Giberson is reluctant to reduce the quantity of the batch to preserve quality. If he can half the quantity while still preserving the proportion of ingredients, he can save $428.40 per year
Time
Let us calculate the amount of hot production time required to produce the 4 items and compare that to the total hot time available
Item
Patterned glasses
Paperwights
Wrapped tumblers
Vases
Weekly
Production
19
10
32
8
Hot Time/Item Weekly Hot Time
(mins)
(mins)
15
285
15
150
15
480
25
200
1115
Hot time needed for the 4 items = 1115 minutes = 1115/60 = 18.58 hours.
Hot time available = 5*6 = 30 hours (Giberson blew glass Tuesday through Saturday)
Percentage utilization = 18.58/30 = 62%
Hot time
Giberson is a skilled glassblower facing financial difficulties in his business. His resources are draining out quickly due to the following reasons –
Lack of proper bookkeeping following his divorce, since his wife used to take care of the activity
He has no knowledge which of his 4 items – glasses, paper weights, tumblers and vases – is profitable
He is in dire need of a better pricing strategy to maintain profits after accounting for costs and his wages
Looking at the available data, Giberson seems to be under-utilizing several of his resources, namely raw materials and time in addition to inefficiently pricing the products. Let us look at each of these factors separately.
Raw Materials
Let us calculate the total weight of raw materials used to produce the 4 items and compare that with the total weight of raw materials available
Weight / piece
(lbs)
Patterned glasses
0.5
Paperwights
0.9
Wrapped tumblers
0.5
Vases
0.6
Item
Weekly
Production
19
10
32
8
Total Weight
(lbs)
9.5
9
16
4.8
39.3
The total weight of raw material used = 39.3 lbs.
The total weight of raw material scrapped = 50 lbs.
Batch size available = 200 lbs.
Percentage utilization = (39.3 + 50)/200 = 45%
Cost/ batch = $21.42.
Cost/year = $21.42*40 = $856.80
Recommendation – Giberson is reluctant to reduce the quantity of the batch to preserve quality. If he can half the quantity while still preserving the proportion of ingredients, he can save $428.40 per year
Time
Let us calculate the amount of hot production time required to produce the 4 items and compare that to the total hot time available
Item
Patterned glasses
Paperwights
Wrapped tumblers
Vases
Weekly
Production
19
10
32
8
Hot Time/Item Weekly Hot Time
(mins)
(mins)
15
285
15
150
15
480
25
200
1115
Hot time needed for the 4 items = 1115 minutes = 1115/60 = 18.58 hours.
Hot time available = 5*6 = 30 hours (Giberson blew glass Tuesday through Saturday)
Percentage utilization = 18.58/30 = 62%
Hot time