Problem
You produce armor kits for military vehicles. Due to a recent expansion of the war on terror to an unnamed new country, the demand for your products is booming, and you do not have enough capacity to fully fill the demand. You offer 3 versions of the product, Basic, Premium and Supreme, which offer different levels of protection. The demand and cost information is as follows:
|
Basic
|
Premium
|
Supreme
|
|
Demand (units)
|
4,000
|
2,000
|
1,000
|
|
Price/unit
|
$1,200
|
$2,000
|
$4,000
|
|
Unit VC
|
$400
|
$600
|
$1,200
|
|
Machine hours per unit
|
1
|
1.5
|
4
|
Your capacity is 600 machine hours.
Required:
(a) Compute the CM per unit of capacity (machine-hour) for each product:
Basic = $ per hour
Premium = $ per hour
Supreme = $ per hour
(b) Based on your answer in (a), how much of each product should you produce?
Basic = units
Premium = units
Supreme = units.