Park Furnishings manufactures school and university classroom furniture. The company has two production plants, located at Easton and Weston. The Easton plant produces tables and chairs and the Weston plant produces desks and computer workstations. Park has a working day of 7.5 hours and employs nine workers at each plant. You may assume that there is a total of 24 working days every month.
All Park products are manufactured using finished pressed wood and polished aluminum fittings. Including scrap, each table, and desk using 20 m2 of pressed wood whereas each chair and workstation needs 12.5 m2 and 30 m2 respectively. A total of 75000 m2 of pressed wood is available each month and is divided equally between the two plants. The aluminum fittings that reinforce the legs of all the production items are purchased from an outside supplier. Each plant can purchase up to 3000 boxes of fittings per month and one box is required for every item of furniture produced. Production times are 72 minutes per table, 18 minutes per chair, 90 minutes per desk and 2 hours per workstation.
The unit profit for chairs and tables are £31 and £77 respectively, whereas each desk and workstation generates profits of £108 and £132 respectively.
Park is considering combining the operations of both plants into a single factory. This consolidation will have the advantage of combining all available production resources as well as reducing administration costs by £1700 per month; however, they have estimated that the cost of renovating and equipping the factory will be £1300000. Due to the current financial position Park Furnishings is only prepared to go ahead with the combined operation if it saves money in the first year of operation.
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