The Constraint at Frayer Inc

question 13

Essay

The constraint at Frayer Inc.is a key raw material.A total of 9,700 ounces of this constrained resource are available.Data concerning the company's two products,Z78 and D87,appear below:
Each unit of product Z78 requires 5 ounces of the constrained raw material;each unit of product D87 requires 2 ounces.
Required:
a.In the present circumstances,which product is most profitable?
b.How much of each product should be produced?
c.The company is considering launching a new product whose variable cost is $157 and that requires 26 ounces of the constrained resource.What is the minimum acceptable selling price for the new product?

---

Definitions:

Domestic Investment

The total capital expenditure within a country's borders on physical assets such as buildings, machinery, and equipment, contributing to the national economy.

Net Exports

The value of a country's total exports minus the value of its total imports. It is a key component in calculating a nation's GDP.

Capital Flight

The rapid movement of large sums of money or assets out of a country due to economic or political instability, leading to a decrease in domestic investment.

Interest Rate

The percentage of a loan amount charged by lenders to borrowers for the use of money, expressed as an annual percentage rate.