Table 5.1
A company makes four products that have the following characteristics: Product A sells for $50 but needs $10 of materials and $15 of labor to produce; Product B sells for $75 but needs $30 of materials and $15 of labor to produce; Product C sells for $100 but needs $50 of materials and $30 of labor to produce; Product D sells for $150 but needs $75 of materials and $40 of labor to produce. The processing requirements for each product on each of the four machines are shown in the table.

Work centers W, X, Y, and Z are available for 40 hours per week and have no setup time when switching between products. Market demand for each product is 80 units per week. In the questions that follow, the traditional method refers to maximizing the contribution margin per unit for each product, and the bottleneck method refers to maximizing the contribution margin per minute at the bottleneck for each product.
-Use the information in Table 5.1. Using the bottleneck method, in what sequence should products be scheduled for production?
A) D, C, B, A
B) D, C, A, B
C) C, D, A, B
D) C, D, B, A

Question

Table 5.1
A company makes four products that have the following characteristics: Product A sells for $50 but needs $10 of materials and $15 of labor to produce; Product B sells for $75 but needs $30 of materials and $15 of labor to produce; Product C sells for $100 but needs $50 of materials and $30 of labor to produce; Product D sells for $150 but needs $75 of materials and $40 of labor to produce. The processing requirements for each product on each of the four machines are shown in the table.
  
Work centers W, X, Y, and Z are available for 40 hours per week and have no setup time when switching between products. Market demand for each product is 80 units per week. In the questions that follow, the traditional method refers to maximizing the contribution margin per unit for each product, and the bottleneck method refers to maximizing the contribution margin per minute at the bottleneck for each product.
-Use the information in Table 5.1. Using the bottleneck method, in what sequence should products be scheduled for production?
A) D, C, B, A 
B) D, C, A, B 
C) C, D, A, B 
D) C, D, B, A

Quizplus · Accepted Answer

According to the bottleneck method, we need to first identify the bottleneck machine, which is machine Z as it has the lowest available capacity (900 minutes). We then calculate the contribution margin per minute for each product at machine Z. 
Product A has a contribution margin per minute of $1.33 ($40/30 minutes), Product B has a contribution margin per minute of $2.25 ($45/20 minutes), Product C has a contribution margin per minute of $2.00 ($60/30 minutes), and Product D has a contribution margin per minute of $2.00 ($60/30 minutes). 
Therefore, the products should be scheduled in the following sequence: 
C (using machine Z for 450 minutes) → D (using machine Z for 300 minutes) → B (using machine Z for 200 minutes) → A (using machine Z for 150 minutes). 
This sequence will maximize the overall contribution margin per minute at the bottleneck machine Z.

Table 5.1 A Company Makes Four Products That Have the Following Characteristics