Production Strategy Essay

The total number of time spent for machining and welding during the manufacture of one BodyPlus100 (includes the machining and welding hours mentioned in Frame Unit, Press Station and Pec-dec Station) are eight (8) hours. The total number of hours spent for Painting and finishing in the entire process (includes the machining and welding hours mentioned in Frame Unit, Press Station, and Pec-dec Station) is five (5) hours. The total number of hours spent for Assembling, testing and packaging for the manufacture of one BodyPlus100 machine is two (2) hours. BodyPlus200 The total number of time spent on machining and welding in the entire process (includes the machining and welding hours mentioned in Frame Unit, Press Station, Pec-dec Station and Leg Press Station) during the manufacture of one BodyPlus200 machine is twelve (12) hours. The total number of hours spent for Painting and finishing in the entire process (includes the machining and welding hours mentioned in Frame Unit, Press Station, Pec-dec Station and Leg Press Station) is ten (10) hours. The total number of hours spent for Assembling, testing and packaging for the manufacture of one BodyPlus100 machine is two (2) hours. Calculations: The total number of working hours assigned for machining and welding processes is 600 hours. The total number of working hours assigned for painting and finishing processes is 440 hours. The total number of working hours assigned for Assembling, Testing and Packaging is 140 hours. To find out the total number of machines that can be made can be found out in the following math. As either of the machines (BodyPlus100 and BodyPlus200) requires two (2) hours of assembling, testing and packaging time. Total number of machines to be produced:    Now let the total number of BodyPlus100 machines manufactures be denoted by the variable ‘X’ and the total number of BodyPlus200 machines manufactured be denoted by the variable ‘Y’. Therefore, the total time required for Assembling, testing and Packaging is 2 hours. That implies,   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   2X + 2Y =140 Then X+Y=70. There we get the total number of possible machines that can be made are seventy in number. As the recommended number of BodyPlus200 machines that have to be produced must be at least 25% of the total number of machines produced. Then ‘Y’ takes a value of 25% of the total number of possible machines i.e. seventy (70). Therefore, 17 fills in the best value of at least 25% of total number of machines produced when the count of total number of machines produced are sixty five (65). Taking the number of BodyPlus100 machines and BodyPlus200 machines manufactured to be 49 and 16 in numbers respectively. Then the calculation follows as: Time required for machining and welding: 1) BodyPlus100: In the Frame unit, it takes four (4) hours of machining and welding time. In the Press Station, it takes two (2) hours of machining and welding time. In the Pec-dec Station, it takes two (2) hours of machining and welding time. The total number of machining and welding time taken in the manufacture of one BodyPlus100 machine is eight (8) hours. Therefore, the total time taken for machining and welding processes during the manufacture of 49 BodyPlus100 is 49*8 = 392 hours. 2) BodyPlus200: In the Frame unit, it takes five (5) hours of machining and welding time. In the Press Station, it takes three (3) hours of machining and welding time. In the Pec-dec Station, it takes two (2) hours of machining and welding time. In the Leg Press Station, it takes two (2) hours of machining and welding time. The total number of machining and welding time taken in the manufacture of one BodyPlus200 machine is twelve (12) hours. Therefore, the total time taken for machining and welding processes during the manufacture of 17 BodyPlus200 is 17*12 = 204 hours. Therefore, the total number of hours spent for the entire manufacture processes is equal to 392 + 204 = 596 hours Hence, we lost 4 hours of unused machining and welding time.    Time required for Painting and finishing: 1) BodyPlus100: In the Frame unit, it takes two (2) hours of painting and finishing time. In the Press Station, it takes one (1) hours of painting and finishing time. In the Pec-dec Station, it takes two (2) hours of painting and finishing time. The total number of painting and finishing time taken in the manufacture of one BodyPlus100 machine is five (5) hours. Therefore, the total time taken for painting and finishing processes during the manufacture of 49 BodyPlus100 is 49*5 = 245 hours. 2) BodyPlus200: In the Frame unit, it takes four (4) hours of painting and finishing time. In the Press Station, it takes two (2) hours of painting and finishing time. In the Pec-dec Station, it takes two (2) hours of painting and finishing time. In the Leg Press Station, it takes two (2) hours of painting and finishing time. The total number of painting and finishing time taken in the manufacture of one BodyPlus200 machine is ten (10) hours. Therefore, the total time taken for machining and welding processes during the manufacture of 17 BodyPlus200 is 17*10 = 170 hours. Therefore, the total number of hours spent for the entire manufacture processes is equal to 245 + 170 = 415 hours. Where the total number hours assigned for painting and finishing is 450 hours. Hence, we lost 35 hours of unused painting and finishing time. Time required for Assembling, Testing and Packaging: 1) BodyPlus100: The manufacturing of one BodyPlus100 machine takes two (2) hours of assembling, testing and packaging time. Therefore, the total number of hours spent in assembling, testing and packaging during the manufacture of 49 machines is 49*2= 98hours. 1) BodyPlus200: The manufacturing of one BodyPlus200 machine takes two (2) hours of assembling, testing and packaging time. Therefore, the total number of hours spent in assembling, testing and packaging during the manufacture of 17 machines is 17*2= 34hours. In total, the total number of hours spent during the entire process is 98 + 34 = 132 hours. As the assigned number of assembling, testing and packaging time is 140 hours. So, eight (8) hours of the assembling, testing and packaging time is unused. Total Cost for producing the machines: 1) BodyPlus100: The BodyPlus100 machine consists of four (4) units. Frame unit: Where the raw material cost for each BodyPlus100 unit is $450 in this Frame Unit. Press Station: Here the raw material costs for each BodyPlus100 unit is $300 in this Press Station. Pec-dec Station: Here the raw material cost for each BodyPlus100 unit is $250 in this Pec-dec Station. Packaging: Here the estimated cost for each BodyPlus100 unit is $50 for packaging. 2) BodyPlus200: The BodyPlus200 machine consists of five (5) units. a) Frame unit: Where the raw material cost for each BodyPlus200 unit is $650 in   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  this Frame Unit. b) Press Station: Here the raw material costs for each BodyPlus200 unit is $400 in   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   this Press Station. c)   Pec-dec Station: Here the raw material cost for each BodyPlus200 unit is $250 in   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   this Pec-dec Station. Leg Press Station: Here the raw material cost for each BodyPlus100 unit is $200   Ã‚  Ã‚  Ã‚  Ã‚   in this Leg Press Station. Packaging: Here the estimated cost for each BodyPlus200 unit is $75 for   Ã‚  Ã‚  Ã‚  Ã‚   packaging. Labor Costs during the manufacture Process: Machining and welding: Given that the labor costs are $20 per hour for machining and welding time.    Now the total number of hours spent for machining and welding in manufacturing one BodyPlus100 and one BodyPlus200 are eight (8) and twelve (12) respectively.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Therefore, the labor costs for machining and welding estimated for manufacturing one BodyPlus100 to be 8*20 = $160.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   And, the labor costs for machining and welding estimated for manufacturing one BodyPlus200 to be 12*20 = $240. Painting and finishing: Given that the labor costs are $15 per hour for painting and finishing time. Now the total number of hours spent for painting and finishing in manufacturing one BodyPlus100 and one BodyPlus200 are five (5) and ten (10) respectively.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Therefore, the labor costs for painting and finishing estimated for manufacturing one BodyPlus100 to be 5*15 = $75.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   And, the labor costs for painting and finishing estimated for manufacturing one BodyPlus200 to be 10*15 = $150. Assembly, Testing and Packaging: Given that the labor costs are $12 per hour for assembly, testing, and packaging time. Now the total number of hours spent for assembling, testing and packaging in manufacturing one BodyPlus100 and one BodyPlus200 are two hours each.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Therefore, the labor costs for painting and finishing estimated for manufacturing one BodyPlus100 to be 2*12 = $24.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   And, the labor costs for painting and finishing estimated for manufacturing one BodyPlus200 to be 2*12 = $24. Hence the total labor costs in manufacturing 49 BodyPlus100 are 49*($160+$75+$24) = 49*($259)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = $12691   Also, the total labor costs in manufacturing 17 BodyPlus200   are 17*($240+$150+$24) =17*($419)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = $7123 Gross expenditure in the production of one unit of:    BodyPlus100: The total cost made in the manufacture of one BodyPlus100 machine (includes raw costs and labor costs)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   $450+$110+$300+$55+$250+$70+$50+$24 = $1309. BodyPlus200: The total cost made in the manufacture of one BodyPlus200   Ã‚  Ã‚  Ã‚  Ã‚   machine (includes raw costs and labor costs)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   $650+$160+$400+$75+$250+$70+$200+$70+$75+$24 = $1974. Profit Calculations: The retail price of one BodyPlus100 machine is $2400. The retail price of one BodyPlus200 machine is $3500. An authorized dealer will purchase at only 70% of the suggested retail price. Hence, a sale of one BodyPlus100 will produce 70% of $2400 = $1680 And a sale of one BodyPlus200 will produce 70% of $3500 = $2450. Admittedly, the net profit that is made in the sale of one BodyPlus100 machine is ($1680 – $1309) = $371. Whereas the net profit that is made in the sale of one BodyPlus200 machine is ($2450 – $1974) = $476. Here the net profit made on manufacturing one BodyPlus200 machine ($476) is larger in number than the profit that is made on manufacturing one BodyPlus100 machine ($371). But if we calculate the net profit that is made per hour work will entirely change the opinion onto BodyPlus100 machine. As, we get a profit of $476 after working 24 hours in manufacturing BodyPlus200 machine. This means the net profit made per hour on manufacturing one BodyPlus200 is only   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   $476/24 = $19.83 Whereas, the net profit made on manufacturing one BodyPlus100 machine is $371 after working for 15 hours. Therefore, profit made per hour is   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   $371/15 = $24.73 Conclusion: So, referring to the above profit math increasing the production percent (i.e. >75%) in the total production will gradually increase the profits of the company. Solutions Plus      Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Table2.1       No. of gallons required Freight Charges No of gallons supplied from Total charges for shipping       Cincinnati Oakland Cincinnati Oakland Cincinnati Oakland Santa Ana 22,418 —– 0.22 —– 22,418 —– 4,931.96 El Paso 6,800 0.84 0.74 —– 6,800 —– 5,032 Pendleton 80,290 0.83 0.49 30,290 50,000 25,140.7 24,500 Houston 100,477 0.45 —– 50,447 50,000 22,701.15 —– Kansas city 241,570 0.36 —– 191,570 50,000 68,965.2 —– Los Angeles 64,761 —— 0.22 14,761 50,000 —— 11,000 Glendale 33,689 —— 0.22 —— 33,689 —— 7,411.58 Jacksonville 68,486 0.34 —— 18,486 50,000 6,285.24 —— Little Rock 148,586 0.34 —— 98,586 50,000 33,519.24 —— Bridgeport 111,475 0.34 —— 51,475 50,000 17,501.5 —— Sacramento 112,000 —— 0.15 62,000 50,000 —— 7,500 Total 990,522 Grand Total 517,615 462,907       Here we can see that the total numbers of gallons that are delivered from Cincinnati are more than 500,000 gallons. So we are short of 17,615 gallons of the locomotives cleaning agent that has to be delivered from Cincinnati. To satisfy the requirement of the majority of the dealers in the remaining locations, and considering the profits, all the 17,615 gallons of the cleaning agent is reduced from the Pendleton deal.   Ã‚                                         Table2.2    No. of gallons required Production cost for the total number of gallons Total charges for shipping Total expenditure from    Cincinnati ($1.20/gallon) Oakland ($1.65/gallon) Cincinnati Oakland Cincinnati Oakland Santa Ana 22,418 —– $36,989.70 —– $4,931.96 —– $41,921.66 El Paso 6,800 —– $11,220.00 —– $5,032.00 —– $16,252.00 Pendleton 62,675 $15,210.00 $82,500.00 $10,520.25 $24,500.00 $25,730.25 $107,000.00 Houston 100,477 $60,536.40 $82,500.00 $22,701.15 —– $83,237.55 $82,500.00 Kansas city 241,570 $229,884.00 $82,500.00 $68,965.20 —– $298,849.20 $82,500.00 Los Angeles 64,761 $17,713.20 $82,500.00 —— $11,000.00 $17,713.20 $93,500.00 Glendale 33,689 —— $55,586.85 —— $7,411.58 —— $62,998.43 Jacksonville 68,486 $22,183.20 $82,500.00 $6,285.24 —— $28,468.44 $82,500.00 Little Rock 148,586 $118,303.20 $82,500.00 $33,519.24 —— $151,822.44 $82,500.00 Bridgeport 111,475 $61,770.00 $82,500.00 $17,501.50 —— $79,271.50 $82,500.00 Sacramento 112,000 $74,400.00 $82,500.00 —— $7,500.00 $74,400.00 $90,000.00    After reducing the supply to the Pendleton concerning larger profits, the total no. of gallons of cleaning agent sent to the Pendleton will be 17,615 less than that stated in Table-2.1   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Table-2.3    No. of gallons required No. of gallons supplied Total Expenditure (in $) Total Income from each location (15% more than the actual cost) Santa Ana 22,418 22,418 $41,921.66 $48,209.91 El Paso 6,800 6,800 $16,252.00 $18,689.80 Pendleton*** 80,290 62,675 $132,730.25 $152,639.79 Houston 100,477 100,477 $165,737.55 $190,598.18 Kansas city 241,570 241,570 $381,349.20 $438,551.58 Los Angeles 64,761 64,761 $111,213.20 $127,895.18 Glendale 33,689 33,689 $62,998.43 $72,448.20 Jacksonville 68,486 68,486 $110,968.44 $127,613.71 Little Rock 148,586 148,586 $234,322.44 $269,470.81 Bridgeport 111,475 111,475 $161,771.50 $186,037.23 Sacramento 112,000 112,000 $164,400.00 $189,060.00 TOTAL 990,552 972,937 $1,583,464.67 $1,821,214.39 *** indicates the locations that are short of the locomotive cleaning agent than they require by any amount. Conclusion: Hence the net profit made for one year is $237,749.72 and if the bid is made for one year the total amount has to be $1,821,214.39 but given that the bid has to be made for two years. Then the bid price would be $3,642,428.78 And the profit expected in two years (taken the oil prices are fixed) is $475,499.44 If the oil price is hiked by 15% then also profit is expected for the Solution Plus Company as there are few locations which are supplied with the cleaning agents without any shipping charges. So only a marginal amount of profit can be made in two years even after placing the bid.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   If the price of oil is slashed by any margin, then there will be more profits for the   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Company after one year.