Before considering the overseas bid for a special purchase

Reference no: EM13575524

Bogeeta, Inc., manufactures two products - bicycles and skateboards. For each bicycle sold, the company receives $95. For each skateboard sold, it receives $65. Each bicycle requires 10 minutes of Gordy's time, 15 minutes of Kelly's time, 8 minutes of David's time, and 10 minutes of Beckie's time. Each skateboard requires 10 minutes from Gordy, 20 minutes from Kelly, 15 minutes from David, and 20 minutes from Beckie. Each worker at Bogeeta works 40 hours per week, and no overtime is allowed. Raw materials cost $40 for each bicycle manufactured and $25 for each skateboard. Demand is unlimited, as is the supply of raw materials. Factory overhead for the plant is $6,000 per weel, including the wages for Gordy, Kelly, David, and Beckie.

Assume that Bogeeta is able to sell only 110 bicycles and 50 skateboards each week. Further, Bogeeta's marketing manager has recently received a request from an exporter to purchase all the bicycles the company can provide at the price of $75 per bike. Since these bicycles will be shipped overseas, these sales will not affect the local market demand of 110 bicycles per week.

REQUIRED:

1. Before considering the overseas bid for a special purchase, compute the optimal solution for Bogeeta given the limited local market demand for bocycles and skateboards. What is the net profit of the birm with this strategy?

2. In light of your soluteion to 1., analyze the overseas bid. Should the company accept the bid? If Bogeeta accepts, how many bicycles should be produced for domestic sales, how many bicycles should be produced for the exporter, and how many skateboards should be produced? What is the net profit of the firm with this new strategy?

Reference no: EM13575524

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