Question

Question 1

Marty, the marketing manager, would like you to assist in providing information for a marketing strategy he is proposing at the annual general meeting next month. He is focusing only on the maca-sponge and wants to know the optimal product mix. Below is an estimate of the costs of the three sizes of the maca-sponge.

Maca-Sponge Sizes
		1.5kg	800 gram	300gram
Selling Price		$30.00	$25.00	$19.00
Costs:
	Raw materials	$10.00	$8.00	$3.00
	Direct labour	$7.00	$4.00	$2.00
	Overhead	$5.00	$4.00	$2.80
	Selling and Admin	$3.00	$2.50	$2.20

  

Each of the three products goes through the same manufacturing process which consists of mixing, spreading, cooking and then packaging ready to be sold. The time for each process, in minutes, is in the table below.

	Mixing	Spreading	Cooking	Packaging
	HOURS REQUIRED
1.5 kg	4	8	30	3
800 gram	10	3	20	2
300 gram	8	8	20	2
HOURS AVAILABLE	8,000	12,000	100,000	10,000

Required:

1. Formulate a linear program to determine the expected mix of maca-sponge, ensuring that the maximum profit is obtained.
2. State the optimal mix and resulting profit. Discuss your results

Answer 1

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