Kernels Company manufactures four unique products A, B, C and D which are produced at five different

workstations V, W, X, Y and Z. Kernels company make and sell up to the limit of its demand per week.
Total amount of purchased raw materials for product A, B, C and D are tk.22, tk.18, tk.16 and tk.12.Each
worker paid tk. 25 per hour. Overhead costs are tk. 7000 per week. The plant operates 40 hours per
week. Five workers work in the company.

Manager of the organization believes that profitability can be improved if bottleneck resources were
exploited to determine the product mix. Price of product A, B, C and D are tk.85, tk.82, tk.45 and tk.40.

(i) Draw flowchart for each product from the following table.

Product A Product B Product C Product D

(Weekly Demand 65 (Weekly Demand 75 (Weekly Demand 85 (Weekly Demand
units ) units ) units ) 90 units )
Station minutes Station minutes Station minutes Station minutes
Step1:V 25 Step1:Y 10 Step1:W 8 Step1:W 13
Step2:y 12 Step2:X 18 Step 2:Z 10 Step 2:Z 12
Step3:X 13 Step3:V 4 Step 3:X 6 Step 3:Y 8

(ii) Calculate the profit margin per unit of each product and per unit of processing time at
bottleneck workstation.
(iii) Which workstation serves as the bottleneck according to workload?

(iv) Identify the best product mix according to traditional approach and bottleneck based
approach.

(iv) Calculate the change in profits by using the bottleneck based scheduling method