Tots Toys Makes a Plastic Tricycle That Is Composed of Three

question 8

Essay

Tots Toys makes a plastic tricycle that is composed of three major components: a handlebar-front wheel-pedal assembly, a seat and frame unit, and rear wheels. The company has orders for 12,000 of these tricycles. Current schedules yield the following information. The company obviously does not have the resources available to manufacture everything needed for the completion of 12000 tricycles so has gathered purchase information for each component. Develop a linear programming model to tell the company how many of each component should be manufactured and how many should be purchased in order to provide 12000 fully completed tricycles at the minimum cost.

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Definitions:

Variance

A measure of the dispersion or spread of a set of data points around their mean value.

Direct Materials Quantity Variance

The difference between the actual quantity of direct materials used in production and the standard quantity expected to be used.

Standard Labor Hours

The predetermined amount of time expected to be required to complete a task or produce a unit of goods under normal conditions.

Direct Materials Price Variance

The difference between the actual cost of materials used in production and the expected (standard) cost, indicating how effectively a company controls its raw material expenses.