Harbor Chemicals
Assignment 5 Sheet Harbour Chemicals
Sheet Harbour Chemicals (SHC) manufactures chemicals used in the paint industry. The process involves three departments. Chemical A, which is purchased for $3 per liter, is processed through Department 1 in batches of 100 liters. Each batch of chemicals processed through Department A produces 70 liters of chemical B and 30 liters of chemical C. Chemical B is sold for $10 per liter. Chemical C is used in Department 2 to produce chemicals D, E, and F. Department 2 processes chemical C in batches of 200 liters. Each batch processed through Department B produces 100 liters of chemical D, 60 liters of chemical E, and 40 liters of chemical F. Chemical D is sold for $12 per liter. Chemical E is a waste product that is donated to the local municipality to be spread on gravel roads to keep down dust. Chemical F is a hazardous waste product that must be disposed of at a cost of $6 per liter. Alternatively, chemical F can be processed through Department 3 to produce chemical C. Department 3 processes chemical F in batches of 40 liters. For each batch of chemical F processed, 20 liters of chemical C are produced. In the past, this operation has had a tendency to build up stocks of chemical C. The maximum storage capactiy for chemical C is 1,000 liters. The accompanying diagram summarizes the production activities at SHC.
The sales manager indicates that sales of chemical B cannot exceed 35,000 liters in the upcoming period, and sales of chemical D cannot exceed 10,000 liters. The production manager advises that 7,000 labor-hours are available for the upcoming period. Workers are paid $10 per hour worked. The production manager indicates that the labor-hours required for each batch in Departments 1,2, and 3 are 10, 15, and 10, respectively. Moreoever, because of constraints relating to the mixing vats and storage, the maximum number of batches in Departments 1, 2, and 3 are 600, 80, and 40, respectively. The estimated variable overhead
Sheet Harbour Chemicals (SHC) manufactures chemicals used in the paint industry. The process involves three departments. Chemical A, which is purchased for $3 per liter, is processed through Department 1 in batches of 100 liters. Each batch of chemicals processed through Department A produces 70 liters of chemical B and 30 liters of chemical C. Chemical B is sold for $10 per liter. Chemical C is used in Department 2 to produce chemicals D, E, and F. Department 2 processes chemical C in batches of 200 liters. Each batch processed through Department B produces 100 liters of chemical D, 60 liters of chemical E, and 40 liters of chemical F. Chemical D is sold for $12 per liter. Chemical E is a waste product that is donated to the local municipality to be spread on gravel roads to keep down dust. Chemical F is a hazardous waste product that must be disposed of at a cost of $6 per liter. Alternatively, chemical F can be processed through Department 3 to produce chemical C. Department 3 processes chemical F in batches of 40 liters. For each batch of chemical F processed, 20 liters of chemical C are produced. In the past, this operation has had a tendency to build up stocks of chemical C. The maximum storage capactiy for chemical C is 1,000 liters. The accompanying diagram summarizes the production activities at SHC.
The sales manager indicates that sales of chemical B cannot exceed 35,000 liters in the upcoming period, and sales of chemical D cannot exceed 10,000 liters. The production manager advises that 7,000 labor-hours are available for the upcoming period. Workers are paid $10 per hour worked. The production manager indicates that the labor-hours required for each batch in Departments 1,2, and 3 are 10, 15, and 10, respectively. Moreoever, because of constraints relating to the mixing vats and storage, the maximum number of batches in Departments 1, 2, and 3 are 600, 80, and 40, respectively. The estimated variable overhead