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

question 71

Multiple Choice

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, which product should be scheduled first?

• A) Product A
• B) Product B
• C) Product C
• D) Product D

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Definitions:

Administration Fee

A fee charged by an entity for the management services it provides.

Membership

A state of belonging to a group, club, or organization which often comes with specific benefits or privileges.

Cancellation

Cancellation refers to the act of terminating or ending a contract, an agreement, or a service before it is completed or takes effect.

Initial Investment

The amount of money used to start a project, purchase an asset, or initiate an investment.