This case is assigned to introductory level courses and the notes of the Ivey case are designed keeping in view the same. The carpenter is underway assessing options for refining the manufacturing process. The business is based on the concept of customized wood floorings. The carpenter had initiated the business as a part-time project. His aim was to increase the efficiency of the manufacturing and develop a production for pine designed flooring that was the current demand. The carpenter was faced with options. His first option was to finance new equipment to increase efficiency, and the other was to hire workers for a part-time job. What remained fixed was the change in the current manufacturing process to meet the forecasted demand of the year.
If Sullivan hires one additional worker, how can the manufacturing operation be allocated between workers to reduce the time to manufacture each board? How will production capacity be affected without other changes to the manufacturing operation?
Repeat question 5 for hiring two additional workers.
Use the least cost approach to evaluate the proposed changes to the manufacturing operation. Which option (router, one additional worker, or two additional workers) is most cost effective? Use the profit maximizing approach to evaluate the proposed changes. What does this analysis reveal about each option?