57 7.9 Identifying and Managing Bottlenecks
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Last updated
- Dec 28, 2020
Learning Objectives
- Understand the theory of constraints.
Question: As we noted in Chapter 6, many companies have limited resources in such areas as labor hours, machine hours, facilities, and materials. These constraints will likely affect a company’s ability to produce goods or provide services. Companies facing constraints often use a variation of differential analysis to optimize the use of constrained resources called the theory of constraints. What are constrained resources, and how does the theory of constraints help managers make better use of these resources?
- Answer
Question: The theory of constraints provides five steps to help managers make efficient use of constrained resources. What are these five steps, and how will they help Computers, Inc.?
- Answer
Review problem 7.8
Southside Company produces three types of baseball gloves: child, teen, and adult. The gloves are produced in separate departments and sent to the quality testing department before being packaged and shipped. A machinehour bottleneck has been identified in the quality testing department. Southside would like to optimize its use of machine hours (step 2) by producing the two most profitable gloves. The machine hours required for each glove follow:
| Child glove | 0.25 machine hours |
| Teen glove | 0.40 machine hours |
| Adult glove | 0.50 machine hours |
Price and variable cost information is as follows:
| Price |
Variable Cost
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|---|---|---|
| Child glove | $15 | $ 5 |
| Teen glove | $20 | $ 8 |
| Adult glove | $35 | $22 |
- Calculate the contribution margin per unit of constrained resource for each glove.
- Which two gloves would Southside prefer to produce and sell to optimize the use of machine hours in the quality testing department?
- Answer
Definitions
- A process in which the work to be performed exceeds available capacity.
- A five-step approach to managing bottlenecks.
