The manager of the deli section of a grocery superstore has just learned that th
ID: 380071 • Letter: T
Question
The manager of the deli section of a grocery superstore has just learned that the department has 130 pounds of mayonnaise, of which 60 pounds is approaching its expiration date and must be used. The mayonnaise is used for two items, a ham spread and a deli spread. Each pan of the ham spread requires 1.0 pounds of mayonnaise, and each pan of the deli spread requires 2.5 pound. Ham and deli spreads cost $3 and $4, respectively, per pan to make. The manager does not want to spend over $170 in material cost. The manager has received an order for hams spread and deli spread. He plans to make at least 14 pans of each spread available for sale given more orders expected. Each pan of ham spread is sold for $ 5 and each pan of deli spread for $7. What are the optimal production quantities for the profit generated by the sale of these two spreads?
Explanation / Answer
The Optimal profit made by just making the order size of the two spreads would be as follows
The order received - 14 pans of each spread
Mayonnaise required to make a pan of Ham spread - 1 pound and 2.5 for Deli Spread
Making charges - $3 and $4 per pan
Sold for - $5 and $7 respectively
Hence - Ham spread = 14*$3-14*5 = $28
- Deli Spread = 14*$4*14*7= $42
Hence the profit would be $70 in case if the order size is made.
For Optimum, we will try to finish the batch of Mayo as there would be material cost
Mayonnaise required to make a pan of Ham spread - 1 pound and 2.5 for Deli Spread
Making charges - $3 and $4 per pan
Sold for - $5 and $7 respectively
We will make 18 deli spreads and 15 pans of Ham spread to make optimum profits
Hence - Ham spread = 15*$3-15*5 = $30
- Deli Spread = 18*$4*18*7= $70
Hence the optimum profit would be $100.
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