Outdoor luggage Inc. makes high-end hard sided luggage for sports equipment. Dat

Question

Outdoor luggage Inc. makes high-end hard sided luggage for sports equipment. Data concerning 3 of the company most popular models appear below.

Std.

Guard

Gof

Guard

fishing

Guard

Selling price per unit

$200

$300

$255

Variable cost per unit

$60

$140

$55

Time required to produce one unit

2 minutes

5 minutes

4 minutes

pounds of plastic pellets per unit

7 pounds

4 pounds

8 pounds

1) given that time is the constraint,

a) which of the above would be the most profitable?

b) which would be the least profitable?

2) A severe shortage of plastic pellets has required the company to cut back on production so now the constraint is no longer time but pounds of plastic.

a) which of the above would be the most profitable?

b) which would be the least profitable?

Std.

Guard

Gof

Guard

fishing

Guard

Selling price per unit

$200

$300

$255

Variable cost per unit

$60

$140

$55

Time required to produce one unit

2 minutes

5 minutes

4 minutes

pounds of plastic pellets per unit

7 pounds

4 pounds

8 pounds

Explanation / Answer

Std.

G of

Finished

Particulars

Guard

Guard

Guard

Selling price per unit

$200

$300

$255

Variable cost per unit

$60

$140

$55

Contribution Per Unit

$140

$160

$200

Time required to produce one unit

2 minutes

5 minutes

4 minutes

Contribution per minute

$70

$32

$50

RANK

I

III

II

pounds of plastic pellets per unit

7 pounds

4 pounds

8 pounds

Contribution per pound of Plastic

$20

$40

$25

RANK

III

I

II

a) The most profitable one is Std Guard.

b) The least profitable one is G of Guard.

2) In case severe shortage of plastic pellets resulting company to cut back on production, hence the constraint is pounds of plastic.

a) The most profitable one is Std G Guard.

b) The least profitable one is Std Guard.

Std.

G of

Finished

Particulars

Guard

Guard

Guard

Selling price per unit

$200

$300

$255

Variable cost per unit

$60

$140

$55

Contribution Per Unit

$140

$160

$200

Time required to produce one unit

2 minutes

5 minutes

4 minutes

Contribution per minute

$70

$32

$50

RANK

I

III

II

pounds of plastic pellets per unit

7 pounds

4 pounds

8 pounds

Contribution per pound of Plastic

$20

$40

$25

RANK

III

I

II

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