Musial Corporation Has Four Products That Use the Same Constrained

question 11

Essay

Musial Corporation has four products that use the same constrained resource. Data concerning those products appear below: $\begin{array}{lrrrr}&\mathrm{J} 100 & \mathrm{~J} 200 & \mathrm{~J} 300 & \mathrm{~J} 400 \\\text {Unit selling price }&\$ 33.40 & \$ 25.80 & \$ 12.10 & \$ 49.00 \\\text {Unit variable cost }&\$ 14.70 & \$ 7.70 & \$ 2.80 & \$ 29.40 \\\text {Amount of the constrained resource required. }&0.48 & 0.30 & 0.21 & 0.54\end{array}$ The company does not have enough of the constrained resource to satisfy for demand of all four products.
Required:
a. If salespersons are paid commissions that are a set percentage of sales, which product would they prefer to sell? In other words, if it is a choice between selling one unit of one product and one unit of another, which product would they prefer to sell?
b. From the standpoint of the entire company, if it is a choice between sales of one unit of one product versus another, which product should the salespersons emphasize?

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Definitions:

Convergence Arbitrage

A strategy involving the purchase of a security in one market and simultaneous sale in another, exploiting differences in prices as they converge.

Statistical Arbitrage

A quantitative approach to equity trading that seeks to exploit pricing inefficiencies between related financial instruments.

Multistrategy Funds

Investment funds that employ a variety of strategies across different asset classes to achieve diversification and manage risk.

Asset Allocation Funds

Mutual funds that invest in a variety of asset classes, such as stocks, bonds, and real estate, to diversify investment risk.