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28 March, 04:50

An automated turning machine is the current constraint at Jordison Corporation. Three products use this constrained resource. Data concerning those products appear below:

LN JQ RQ

Selling price per unit $ 161.72 $ 350.32 $ 468.25

Variable cost per unit $ 118.94 $ 241.42 $ 342.92

Minutes on the constraint 2.30 6.60 8.30

Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized.

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  1. 28 March, 06:44
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    Product LN JQ RQ

    Ranking 1st 2nd 3rd

    Explanation:

    Whenever a company is faced with a limiting factor i. e a resource in short supply, the company should allocate the resource to the product with he highest contribution per unit of the scare resource.

    Jordision should rank rank its products using contribution per minute of constraint

    Ths is done as follows:

    /Product LN JQ RQ

    Selling price 161.72 50.32 468.25

    Variable cost (118.94) (241.42) (342.92)

    Contribution (a) 42.78 108.9 125.33

    Minute (b) 2.30 6.60 8.30

    Contribution/minute ($) a/b 18.6 16.5 15.1

    Ranking 1st 2nd 3rd
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