Optimizing Product Mix :Linear programming
Not what you're looking for?
Optimizing Product Mix. California Products Company has the capability of producing and selling three products. Each product has an annual demand potential (at current pricing and promotion levels), a variable contribution, and an annual fixed cost. The fixed cost can be avoided in the product is not produced at all. This information is summarized as follows:
Product Demand Contribution Fixed Cost
I 290,000 $1.20 $60,000
J 200,000 $1.80 200,000
K 50,000 $2.30 55,000
Each product requires work on three machines. The standard productivities and capacities are as follows:
Hours per 1,000 Units
Hours
Machine Product I Product J Product L Available
A 3.205 3.846 7.692 1,900
B 2.747 4.808 6.41 1,900
C 1.923 3.205 9.615 1,900
a. Determine which products should be produced, and how much of each should be produced, in order to maximize profit contribution from these operations.
b. Suppose the demand potential for product K were doubled. What would be the maximum profit contribution?
Purchase this Solution
Solution Summary
Solution explains which products should be produced, and how much of each should be produced, in order to maximize profit contribution from these operations.and calculation of the maximum profit contribution.
Purchase this Solution
Free BrainMass Quizzes
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.