- Batik Gerimis was formed by Che Mahadi and their wife in 1997 after lengthy and laborious work to learn skills in batik making as well as business operations. Batik Gerimis invested money and efforts to produce saleable and attractive batik for its customers. Investment in the new batik-making process in terms of machine and manpower was very important to create success in Batik Gerimis. The new process not only shortens the time taken to produce but also reduces overall product unit costs. This enables Batik Gerimis to offer competitive prices to its customers. Most of its customers were from corporate, schools, and individuals all over Malaysia, who sometimes came by bus and in groups. Part of it is because, Batik Gerimis was located in a tourist attraction, Pantai Cahaya Bulan. Same to other batik producers, Batik Gerimis competed with neighbouring countries’ batik which are Indonesia, China, and Thailand.
Back Gerimis produced batik canting and batik stencil. Batik canting and batik stencil processes were almost the same except that batik canting’s patterns were directly drawn on the fabrics using batik wax that had been boiled for about 10-15 minutes before the canting process. While batik stencil patterns were first drawn on the stencil film, then the pattern was printed on the silkscreen using stencil film. The batik-making process was laborious work or labour-intensive with creativity and imaginative ideas playing a very important role in the process.
Each batik canting (BC) required two square meters of fabric, and each batik stencil (BS) required three square meters of fabric. During the next two months, the following demands for BC and BS must be met on time
During each month the following resources were available: September, 6,000 square metres of fabric; October, 9,000 square metres of fabric. In addition, fabric that was available during September and is not used can be used during October. The cost of the fabric was RM3 per square meter. During each month it costs RM10 to produce a kain pasang (both BC and BS) with regular time labour and RM16 with overtime labour. During each month a total of at most 2,500 kain pasang can be produced with regular labour hours, however, if it’s more than 2,500, overtime labour costs will incur. At the end of each month, a holding cost (cost of ending inventory) of RM5 per kain pasang is incurred.
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REQUIRED:
- Determine how to meet demands for the next two months on time at minimum cost. Assume that 100 BC and 200 BS were already in inventory at the beginning of September. Indicate the number of productions for BC and BS in each month, the number of ending inventory for each BC and BS in each month, and total costs.
- Che Mahadi estimated there will be a shortage in the supplies of fabric during October. Use a one-way SolverTable to investigate the effect of fabric shortage to the lowest of 3,000, then increase the number by 500 to 10,000 square meters. Explain the effect of fabric shortage on Batik Gerimis.
- Use a two-way SolverTable to investigate the effect on the total cost of two simultaneous changes. The first change is to increase overtime cost to RM20 and reduce it to RM10 in increments of RM2. Secondly, change the production capacity (currently 2,500) from 1,500 to 5,000 in increments of 500. Explain the net effect on total cost because of changes in each variable. What changes would you recommend for production capacity?
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