Bakker Industries Sells Three Products (611, 613, and 615) That

Essay

Bakker Industries sells three products (611, 613, and 615) that it manufactures in four departments. Both labor and machine time are applied to products in each of the four departments. The machine-processing and labor skills required in each department prohibit switching either machines or labor from one department to another. However, Bakker has a good supply of both full-time and part-time labor and does not expect hiring or retention of employees to be a problem. Because of the availability of part-time labor, Bakker considers labor a variable cost and includes it in the calculation of throughput margin.
Bakker's management is planning its production schedule for the next several months. Some machines will be out of service for extensive overhauling. Available machine times by department for each of the next six months are as follows: Labor and machine specifications per unit of product are as follows: The Sales Department's forecast of product demand over the next six months is as follows: Bakker's inventory levels will not increase or decrease during the next six months. The unit price and cost data valid for the coming six months are as follows: Required:
1. Determine whether Bakker can meet the monthly sales demand for the three products. What department, if any, is a constraint?
2. What monthly production schedule would be best for Bakker Industries?