The Operations Manager of a Mail Order House Purchases Double

question 31

Multiple Choice

The operations manager of a mail order house purchases double (D) and twin (T) beds for resale. Each double bed costs $500 and requires 100 cubic feet of storage space. Each twin bed costs $300 and requires 90 cubic feet of storage space. The manager has $75,000 to invest in beds this week, and her warehouse has 18,000 cubic feet available for storage. Profit for each double bed is $300 and for each twin bed is $150. The manager's goal is to maximize profits.
What is the storage space constraint?

• A) 90D + 100T ≤ 18,000
• B) 100D + 90T ≥ 18,000
• C) 300D + 90T ≤ 18,000
• D) 500D + 100T ≤ 18,000
• E) 100D + 90T ≤ 18,000

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Definitions:

Common Fixed Expenses

Overhead costs that do not vary with production volume and are shared across different departments or products.

Break-Even

The point at which total revenues equal total costs, resulting in no profit or loss for the business.

Sales Dollars

A measurement of revenue generated from the sale of goods or services, expressed in monetary units.

Net Operating Income

The total profit of a company after operating expenses are deducted from operating revenues, but before interest and taxes are deducted.