Lost Maples Winery Makes Three Varieties of Contemporary Texas Hill

question 74

Essay

Lost Maples Winery makes three varieties of contemporary Texas Hill Country wines: Austin Formation (a fine red),Ste.Genevieve (a table white),and Los Alamos (a hearty pink Zinfandel).The raw materials,labour,and contribution per case of each of these wines is summarized below.
The winery has 2800 bushels of Variety A grapes,2040 bushels of Variety B grapes,800 pounds of sugar,and 1060 man-hours of labour available during the next week.The firm operates to achieve maximum contribution.Refer to the POM for Windows panels showing the solution to this problem. Answer the following questions.
a.For maximum contribution,how much of each wine should be produced?
b.How much contribution will be made by selling the output?
c.Is there any sugar left over? If so,how much? If not,what is its shadow price (dual value)? Explain what this value means to Lost Maples' management.
d.Interpret the meaning of the lower bound to Labour in the Ranging analysis.That is,explain how the solution would change if the amount of labour fell below that lower value.
e.Interpret the meaning of the upper bound to Los Alamos wine in the Ranging analysis.

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Definitions:

Earnings Per Share

A financial metric calculated by dividing the net earnings available to common shareholders by the average outstanding shares.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the ownership stake of shareholders.

Cash Dividends

Cash Dividends are payments made by a corporation to its shareholders, usually as a distribution of profits.

Earnings Per Share

A financial metric that measures the portion of a company's profit allocated to each outstanding share of common stock, indicating a company's profitability.