The Constrained Resource at Nealen Corporation Is a Key Raw

question 41

Essay

The constrained resource at Nealen Corporation is a key raw material. A total of 9,800 ounces of the constrained resource are available. Data concerning the company's two products, B08 and O05, follow: $\begin{array}{lrr}&\text { B08 } & {O05} \\\text { Demand (units) }&1,040 & 1,550 \\\text { Selling price }&\$ 102.00 & \$ 124.00 \\\text { Variable cost }&\$ 61.20 & \$ 86.80\end{array}$ Product B08 requires 6 ounces of the constrained resource; product O05 requires 4 ounces.
Required:
a. Which product is most profitable, given the company's constraint?
b. How much of each product should be produced?
c. What is the total contribution margin if your plan in part (b) above is followed?

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Definitions:

Stakeholders

refers to individuals or groups that have an interest, stake, or investment in a company and can either affect or be affected by its actions.

Hierarchy Culture

An organizational culture that emphasizes a clearly defined structure, control, and authority, where decisions are often made at the top levels.

Formal Chain

A structured sequence of command or a hierarchy within an organization, where communication and decisions flow through a pre-defined path.

Efficiency

The ability to accomplish a task or objective with the minimal expenditure of time and resources.