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+--- Thread: Optimal Production Plan and Contribution Margin (/thread-optimal-production-plan-and-contribution-margin)
Optimal Production Plan and Contribution Margin - pcoin15 - 02-14-2009
HI brothers and sisters..anyway help will this question is appreciated...thank you
A company produces three different products which have the following details
Prod I Prod II Product III
Direct material 8 kg per unit 5 kg per unit 10 kg per unit
Contribution $35 per unit $25 per unit $48 per unit
Demand in units 3000 3000 2000
(excluding special contract)
The company must produce 1 000 units of Product I for a special contract before meeting normal demand. Unfortunately there are only 35 000 kg of material available.
<b>What is the optimal production plan (A, B, C or D) and why?</b>
Product I (units) Product II (units) Product III (units)
A 1 000 1 400 2 000
B 1 000 3 000 1 200
C 1 875 - 2 000
D 4 000 600 -
- tariqab - 02-14-2009
pcoin15,
option B, where contribution margin is maximum 167,600 within constraints.
Regards
Tariq
- pcoin15 - 02-15-2009
Hello Tariq...thank you for your comments....
I agree it is b