EPM Industries manufactures and sells three products, which are manufactured in a factory with four departments. Both labour and machine time is applied to the products as they pass through each department. The machines and labour skills required in each department are so Specialised that machines nor labour can be switched from one department to another.
EPM Industries’ management is planning its production schedule for the next few months. The planning is complicated, because there are labour shortages in the community and some machines will be down several months for repairs. Management has assembled the follow8 information regarding available machine and labour time by department and the machine hours and direct labour hours required per unit of product. These data should be valid for the next six months.
The sales department believes that the monthly demand for the next six months will be a follows:
Inventory levels are satisfactory and need not be increased or decreased during the next six month unit price cost data that will be valid for the next six months are as follows:
1. Calculate the monthly requirement for machine hours and direct labour hours for the production of products M07, T28, and B19 to determine whether the monthly sales demand for the three products can be met by the factory.
2. What monthly production schedule should [PM Industries select in order to maximise its dollar profits? Explain how you selected this production schedule, and present a schedule of the contribution to profit that would be generated by your production schedule.
3. Identify the alternatives EFM Industries might consider so it can supply its customers with all the product they demand.