Question

5 - e. a company that manufactures bicycles received an order from a national sporting goods chain. the order was for 150 bicycles that must be manufactured in 30 days. after 10 days, 45 bicycles had been produced. the manager scheduled the employees to work overtime for two saturdays. at the end of 20 days, 110 bicycles were completed.

1. write a standard for daily bicycle production that the company must meet in order to complete the order in the required 30 days.
2. at the end of the first 10 days, what was the total variance from the number of bicycles that should have been completed?
3. what was the variance from the daily standard at the end of the first ten days?
4. what was the corrective action taken by the manager?
5. at the end of 20 days, what was the total variance from the number of bicycles that should have been completed?
6. write a standard for the daily production of bicycles for the last 10 days in order to complete the contract on schedule.
7. what should the manager do if the production level exceeds the standard during the first two of the remaining production days?

Explanation:

Step1: Calculate standard daily production for 30 - day order

The order is for 150 bicycles in 30 days. So the standard daily production is $\frac{150}{30}=5$ bicycles per day.

Step2: Calculate variance at the end of 10 days

The standard number of bicycles to be produced in 10 days is $5\times10 = 50$. The actual number is 45. The variance is $50 - 45=5$ (negative variance as fewer were produced).

Step3: Calculate daily - variance at the end of 10 days

The daily standard is 5 bicycles. In 10 days, the actual production is 45, so the actual daily production is $\frac{45}{10}=4.5$. The variance from the daily standard is $5 - 4.5 = 0.5$ (negative variance).

Step4: Identify corrective action

The manager scheduled employees to work overtime for two Saturdays.

Step5: Calculate variance at the end of 20 days

The standard number of bicycles to be produced in 20 days is $5\times20=100$. The actual number is 110. The variance is $110 - 100 = 10$ (positive variance as more were produced).

Step6: Calculate standard for last 10 days

There are $150-110 = 40$ bicycles left to produce in 10 days. So the standard daily production for the last 10 days is $\frac{40}{10}=4$ bicycles per day.

Step7: Suggest action if production exceeds standard

If production exceeds the standard in the first two of the remaining production days, the manager could consider reducing overtime, re - allocating resources to other tasks or projects, or increasing the order quantity if possible.

Answer:

1. 5 bicycles per day
2. 5 (negative variance)
3. 0.5 (negative variance)
4. Scheduled employees to work overtime for two Saturdays
5. 10 (positive variance)
6. 4 bicycles per day
7. Consider reducing overtime, re - allocating resources, or increasing order quantity if possible