A Manager Must Decide on the Mix of Products to Produce

question 98

Essay

A manager must decide on the mix of products to produce for the coming week. Product A requires three minutes per unit for molding, two minutes per unit for painting, and one minute for packing. Product B requires two minutes per unit for molding, four minutes for painting, and three minutes per unit for packing. There will be 600 minutes available for molding, 600 minutes for painting, and 420 minutes for packing. Both products have contributions of $1.50 per unit. Answer the following questions; base your work on the solution panel provided.
$$\begin{array} { | l | r | r | r | r | r | } \hline & \mathrm { A } & \mathrm { B } & & \text { RHS } & \text { Dual } \\\hline \text { Maximize } & 1.5 & 1.5 & & & \\\hline \text { Molding } & 3 & 2 . & \square & 600 & 0.375 \\\hline \text { Painting } & 2 & 4 &\square & 600 & 0.1875 \\\hline \text { Packing } & 1 . & 3 & \square& 420 & 0 . \\\hline \text { Solution --- } & 150 & 75 & & 337.5 & \\\hline\end{array}$$ a. What combination of A and B will maximize contribution?
b. What is the maximum possible contribution?
c. Are any resources not fully used up? Explain.

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Definitions:

International Bonds

Bonds issued in a country by a non-domestic entity, allowing the issuer to access foreign capital.

Uncovered Interest Parity

A financial theory that posits that the difference in interest rates between two countries is equal to the expected change in exchange rates between their currencies.

Exchange Rate Risk

The potential for losses due to fluctuation in the exchange rate between two currencies in international transactions.

Foreign Exchange Market

A global marketplace for trading currencies against each other, determining the exchange rate values between different currencies.