E7-12 Making Decisions Involving Constrained Resource [LO 7-2, 7-7] Cordova manu
ID: 342111 • Letter: E
Question
E7-12 Making Decisions Involving Constrained Resource [LO 7-2, 7-7]
Cordova manufactures three types of stained glass window, cleverly named Products A, B, and C. Information about these products follows:
Cordova currently is limited to 45,000 labor hours per month. Cordova’s marketing department has determined the following demand for its products:
Required:
Given the company’s limited resource and expected demand, compute how many units of each product Cordova should produce to maximize its profit. (Enter the products in the sequence of their preferences; the product with first preference should be entered first. Round your answer to the nearest whole number.)
Cordova currently is limited to 45,000 labor hours per month. Cordova’s marketing department has determined the following demand for its products:
Required:
Given the company’s limited resource and expected demand, compute how many units of each product Cordova should produce to maximize its profit. (Enter the products in the sequence of their preferences; the product with first preference should be entered first. Round your answer to the nearest whole number.)
Explanation / Answer
Product A: Profit Per Unit is 44-20.6-6=17.4
Labour Hrs Per Unit : 1.5
Profit Per Hour= 17.4/1.5 = 11.6
Product B: Profit Per Unit is 54-12.75-6=35.25
Labour Hrs Per Unit : 2.5
Profit Per Hour= 35.25/2.5 = 14.1
Product C: Profit Per Unit is 84-36.6-6=41.4
Labour Hrs Per Unit : 3
Profit Per Hour= 41.4/3 = 13.8
Most profitable to Make B
In 45000 hrs available make all 7000 units of B and all 5000 units of C which will take total 7000*2.5+5000*3=32500 hrs
Remaining Hours= 45000-32500= 12500 hrs
No. of Possible units of A= 12500/1.5= 8333 units
So,
B- 7000 units
C- 5000 UNITS
A- 8333 UNITS
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