ECR past exam papers

System

Afternoon All

Tracy here is sunny Germany

I am going through past exam papers but i am getting stuck on the same thing each time - just hoping someone can help me.

this is an example from december 2003

For each of the next three months, the Production Director estimates that there is a maximum
of 3,000 direct labour hours available for the production of running shoes.
Task 2.3
(a) Use the data from task 2.1 to complete the table below.
Product Exe Wye Zed
Unit contribution

Labour hours per unit

Contribution per
labour hour

(b) Calculate how many units of products Exe, Wye and Zed the company
should make and sell each month to maximise its profits using 3,000
labour hours.

it is the question (b) part i am stuck on, where do you start to breakdown how much of each you should make.

any help would be greatly appreciated as i get to this part in the paper - stand up and make a cup of coffee - look at the answer and say 'oh yes' but not actually understand how they have got to the answer

many thanks in advance as always

Tracy

System

Re:ECR past exam papers

Hi from rainy Cornwall,

Assumimg you've worked out the contribution per labour hour, you would then rank the products on that basis, highest first.

Then you need to work out how many labour hours it would take to meet the demand/projected sales for the each product starting with the top ranked one and moving through the list.

For example

Product Exe
Demand 1,000 per month
Hours per unit 2
Rank 1

Product Wye
Demand 500 per month
Hours per unit 1.5
Rank 2

Product Zed
Demand 500 per month
Hours per unit 2.5
Rank 3

There is a limit of 3,000 labour hours available

Starting with Exe, we can meet the entire demand which will take 2,000 hours (2*1,000) which leaves 1,000 hours.

We can also make all we need of Product Wye with the remaining 1,000 hours. This will use 750 hours (1.5*500) leaving 250 hours.

Clearly, we can't make all we need of Product Zed. All we can make is 100 units (250/2.5) but because this product has the lowest contribution/unit restricting its production is the best option.

So to maximise profits given the limit on labour hours we should make: Product Exe 1000 units, Product Wye 500 units and Product Zed 100 units

I've also got a small worked example here which is laid out slighty better.

Hope that helps

Chris

System

Re:ECR past exam papers

thanks for that - i will print it all off and have a go - hopefully i will now be able to do that

many thanks again

Tracy