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    Outdoors Inc.

    Uploaded by

    Dev Sharma
    Outdoors Inc. produces lawn furniture including chairs, benches, and tables. Each product requires different amounts of time in the tube bending and welding departments and different amounts of tubing material. The company wants to determine the optimal production mix to maximize contribution given constraints of available machine time and material. The document provides production details and the linear program results to help analyze various what-if scenarios about adjusting prices, adding new products, required minimum production amounts, and purchasing additional material.

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    © All Rights Reserved
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    Outdoors Inc.

    Uploaded by

    Dev Sharma
    23 views3 pages
    Outdoors Inc. produces lawn furniture including chairs, benches, and tables. Each product requires different amounts of time in the tube bending and welding departments and different amounts of tubing material. The company wants to determine the optimal production mix to maximize contribution given constraints of available machine time and material. The document provides production details and the linear program results to help analyze various what-if scenarios about adjusting prices, adding new products, required minimum production amounts, and purchasing additional material.

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    Outdoors Inc. produces lawn furniture including chairs, benches, and tables. Each product requires different amounts of time in the tube bending and welding departments and different amounts of tubing material. The company wants to determine the optimal production mix to maximize contribution given constraints of available machine time and material. The document provides production details and the linear program results to help analyze various what-if scenarios about adjusting prices, adding new products, required minimum production amounts, and purchasing additional material.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    23 views3 pages

    Outdoors Inc.

    Uploaded by

    Dev Sharma
    Outdoors Inc. produces lawn furniture including chairs, benches, and tables. Each product requires different amounts of time in the tube bending and welding departments and different amounts of tubing material. The company wants to determine the optimal production mix to maximize contribution given constraints of available machine time and material. The document provides production details and the linear program results to help analyze various what-if scenarios about adjusting prices, adding new products, required minimum production amounts, and purchasing additional material.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    OUTDOORS Inc.

    Outdoors, Inc., has lawn furniture as one of its product lines. They currently have three
    items in that line - a lawn chair, a standard bench, and a table. These products are produced
    in a two-step manufacturing process involving the tube bending department and the welding
    department. The time required by each item in each department is as follows:

    Product
    Lawn Present
    Chair Bench Table Capacity
    Tube Bending 1.2 1.7 1.2 1,000

    Welding 0.8 0 2.3 1,200

    The contribution that outdoors, Inc., receives from manufacture and sale of one unit of
    each product is $3 for a chair, $3 for a bench, and $5 for a table.
    The company is trying to plan its production mix for the current selling season. They
    feel that they can sell any number they produce, but unfortunately production is further
    limited by available material because of a prolonged strike. The company currently has on
    hand 2,000 pounds of tubing. The three products require the following amounts of this
    tubing: 2 pounds per chair, 3 pounds per bench, and 4.5 pounds per table.
    In order to determine the optimal product mix, the production manager has formulated
    the linear program and obtained the results shown on next page.

    Questions

    a) What is the optimal production mix? What contribution can the firm anticipate by
    producing this mix?
    b) What is the value of one unit more of tube-bending time? Of welding time? Of
    metal tubing?
    c) Outdoors, Inc., has a chance to sell some of its capacity in tube bending at a cost of
    $1.50 an hour. If it sells 200 hours at that price, how will this affect contribution?
    d) If the contribution on chairs were to decrease to $2.50, what would be the optimal
    production mix, and what contribution would this production plan give?
    e) The R&D department has been redesigning the bench to make it more profitable.
    The new design will require 1.1 units of tube bending time, 2 hours of welding, and
    2.0 pounds of metal tubing. If they can sell one unit of this bench with a unit
    contribution of $3, what effect will it have on overall contribution?

    [14]
    f) Marketing has suggested a new patio awning that would require 1.8 units of tube-
    bending time, 0.5 units of welding time, and 1.3 pounds of metal tubing. What
    contribution must this new product have to make it attractive to produce this
    season?
    g) If Outdoors, Inc., feels that it must produce at least 100 benches to round out its
    product line, what effect will that have on its contribution?
    h) A local distributor has offered to sell Outdoors, Inc. some additional metal tubing
    for 60 cents a pound. Should Outdoors buy it? If yes, how much would their
    contribution increase if they bought 500 pounds and used it in an optimal fashion?

    [15]
    [16]

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