4.1 Angelina Ltd manufactures two products viz. Product M and Product N. Product

Question

4.1 Angelina Ltd manufactures two products viz. Product M and Product N. Product M requires 2.5 kg of raw materials and 4 labour hours, whilst product N requires 5 kg of the same raw material and 2 labour hours. Additional information for the past period for these two products are: costs per ring are provided below: Sales demand (in units) product M 500 product N500 Per unit Contribution per unit 80(R) Per unit product M 120 (R) Per unitproduct N Required 4.1.1 Determine the product mix that will maximize profits and calculate the value of contribution that would be earned if only 1 248 labour hours are available.  

Explanation / Answer

Labours Hours is bottleneck resource, & Product N's Contribution per unit is higher, so our priority product is Product N & we can use balance hours for Product M.

We have 1248 hours-
1.Product N required 2 hours per unit & it's demand is 500 units, so it requires 500*2=1000 hours.
2.we have balance 248 hours which we utilized for Product M
Product M reuires 4 hours for each unit, so no. of units of Product M we can produce=248/4=62.

This is our Max optimum product mix ie.
Product M- 62 units
Product N- 500 units

Value of contribution=

Product M = 62*80  =4960/-

Product N = 500*120 = 60000/-

Total value of contribution=64960/-

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