CKC manufactures two different types of toys (A and B, sold in 1,000-count boxes)

Question: CKC manufactures two different types of toys (A and B, sold in 1,000-count boxes) that are manufactured and assembled on three different workstations (W, X, and Y) using a small-batch process (see Figure). Batch setup times are negligible. The flowchart denotes the path each product follows through the manufacturing process, and each product’s price, demand

Show transcribed image textAnswer: Please refer to the following snapshots: Work load (mins) on a workstation for a product = Weekly demand of that product * processing time per unit for that product on that workstation For Workstation X, Work load (mins) on X for product A =…View the full answerTranscribed image text: CKC manufactures two different types of toys (A and B, sold in 1,000-count boxes) that are manufactured and assembled on three different workstations (W, X, and Y) using a small-batch process (see Figure). Batch setup times are negligible. The flowchart denotes the path each product follows through the manufacturing process, and each product’s price, demand per week, and processing times per unit are indicated as well. Purchased parts and raw materials consumed during production are represented by inverted triangles. CKC can make and sell up to the limit of its demand per week; no penalties are incurred for not being able to meet all the demand. Each workstation is staffed by a worker who is dedicated to work on that workstation alone and is paid $6 per hour. Total labor costs per week are fixed. Variable overhead costs are $3,500/week. The plant operates two 8-hour shifts per day, 5 days per week. The senior management at CKC is concerned with the existing capacity limitation, so they want to accept the mix of orders that maximizes the company’s profits. Traditionally, CKC has utilized a method whereby decisions are made to produce as much of the product with the highest contribution margin as possible (up to the limit of its demand), followed by the next highest contribution margin product, and so on until no more capacity is available. Because capacity is limited, choosing the proper product mix is crucial. The newly hired production supervisor is an avid follower of the TOC philosophy and the bottleneck method for scheduling. He believes that profitability can indeed be approved if bottleneck resources are exploited to determine the product mix. Product A $3 Raw materials Product B $6 Raw materials Step 1 at workstation W (10 min) Step 1 at workstation X (20 min) Step 2 at workstation X (10 min) Step 2 at workstation W (14 min) $4 $6 Finish with Step 3 at workstation Y (15 min) Purchased part Finish with Step 3 at workstation Y (11 min) Purchased part Product: A Price: $50/unit Demand: 90 units/wk Product: B $60/unit Price: Demand: 80 units/wk c) What is the profit if the bottleneck method is used for selecting the product mix? Product A Product B Contribution margin ($) Time at bottleneck (min) Contribution margin per minute When ordered from highest to lowest contribution margin/minute at the bottleneck, the manufacturing sequence of these products is Minutes at Minutes Left after Making Minutes Left after Making Workstation Start W X The best product mix according to this bottleneck based approach is then and units of units of Revenues ($) Raw materials ($) Purchased part ($) Labor ($) Overhead Profit ($)