case study.docx

I.

Case Study : Production Strategy

Better Fitness, Fitness, Inc. (BFI), manufactures exercise exercise equipment at its plant in Freeport, Freeport, ong Island. It recently designed t!o uni"ersal !eig#t mac#ines for t#e #ome exercise exercise mar$et. mar$et. Bot# mac#ines use BFI patented tec#nology t#at pro"ides t#e user !it# an extremely !ide range of motion capa%ility for eac# type of exercise exercise performed. performed. &ntil no!, suc# capa%ilities #a"e %een a"aila%le only on expensi"e !eig#t mac#ines used primarily %y p#ysical t#erapists. 't a recent trade s#o!, demonstrations of t#e mac#ines resulted in signicant dealer interest. In fact, t#e num%er of orders o rders t#at BFI recei"ed at t#e trade s#o! far exceeded its manufacturing capa%ilities for t#e current current production period. 's a result, management decided to %egin production of t#e t!o mac#ines. #e t!o mac#ines, !#ic# BFI named BodyPlus*++ and BodyPlus++, require require di-erent amounts of resource to produce.  #e BodyPlus*++ consists consists of a frame unit, a press station and a pec dec station. /ac# frame produced uses 0 #ours of mac#ining and !elding time and  #ours of painting and nis#ing time. /ac# press station requires requires  #ours of mac#ining and !elding and * #our of painting pa inting and nis#ing, and eac# pecdec station uses  #ours of mac#ining and !elding time and  #ours of painting and nis#ing time. In addition  #ours are spent assem%ling, testing and pac$aging eac# BodyPlus*++. #e ra! material costs 102+ for eac# frame, 13++ for eac# press station and 12+ for eac# pecdec station. Pac$aging costs are estimated at 12+ per unit.  #e BodyPlus++ consists consists of a frame unit, a press station, a pecdec pecdec station, and a leg press station. /ac# frame produced uses 2 #ours of mac#ining and !elding time and 0 #ours of painting and nis#ing time. /ac# press station requires requires 3 #ours mac#ining and a nd !elding time and  #ours #ou rs of painting and nis#ing time, eac# pecdec station uses  #ours of mac#ining and !elding time and  #ours of painting and nis#ing time, and eac# leg press station requires requires  #ours of mac#ining and !elding time and  #ours of painting and nis#ing time. In addition,  #ours are spent assem%ling, testing, and pac$aging eac# BodyPlus++. #e ra! material costs are: 142+ for eac# frame, 10++ for eac# press station, 12+ for eac# pecdec station, and 1++ for eac# leg press station5 pac$aging costs are estimated to %e 162 per unit.  For t#e next production period, management estimates t#at 4++ #ours of mac#ining and !elding time, 02+ #ours of painting and nis#ing time, and *0+ of assem%ly, testing, and pac$aging time !ill %e a"aila%le. Current Current

la%our costs are 1+ per #our for mac#ining and !elding time, 1*2 per #our for painting and nis#ging time, and 1* per #our for assem%ly, testing, and pac$aging time. #e mar$et in !#ic# t#e t!o mac#ines must compete suggests a retail price of 1,0++ for t#e BodyPlus*++ and 13,2++ for t#e BodyPlus++, alt#oug# some 7exi%ility may %e a"aila%le to BFI %ecause of t#e unique capa%ilities of t#e ne! mac#ines. 'ut#ori8ed BFI dealers can purc#ase mac#ines for 6+9 of t#e suggested retail price.  BFIs President %elie"es t#at t#e unique capa%ilities of t#e BodyStrong unit can #elp position BFI as one of t#e leaders in #ig#end exercise equipment. Consequently, #e #as stated t#at t#e num%er of units of BodyPlus++ produced must %e at least +9 of t#e total production.

;anagerial etermine t#e no. of production of BodyPlus*++ and BodyPus++ to maximi8e t#e prot

Su%Eect to Constraints: /quation '. ?xyG4++ 2x*+yG02+ xyG*0+ xH+ yH+  #e company !ill only get 6+9 of t#e retail price. Computed as follo!s: P&CIDQ CDS P/< 'DQ DC'IDQS

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Santa 'na /l Paso Pendleton

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+.02 +.34  

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