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:

Bond Interest Expense

The cost a company incurs for borrowing money through issuing bonds, represented as interest payments to bondholders.

Annual Interest

The interest amount accumulated over one year on borrowed funds or investments.

Effective-Interest Method

A way of calculating the amortized cost of a bond and the amount of interest expense over its life, reflecting the constant rate of interest over the period.

Bond Discount Amortization

The process of gradually writing off the discount on a bond over the life of the bond, reflecting the increase in its value as it nears maturity.