The constraint at Dreyfus Inc. is an expensive milling machine. The three produc

Question

The constraint at Dreyfus Inc. is an expensive milling machine. The three products listed below use this constrained resource. VY QX AM Selling price per unit......................... $78.65 $421.59 $145.92 Variable cost per unit........................ $62.40 $331.20 $113.28 Time on the constraint (minutes)...... 1.30 6.90 2.40 Required: b. Assume that sufficient constraint time is available to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of the constrained resource?

Explanation / Answer

The company should be willing to pay up to 12.50 per minute to obtain more of the constrained resource.

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