Reference no: EM133057670

Question - A company running an orchard, with an adequate supply of labour, presents the following data and requests your advice about the area to be allotted for the cultivation of various types of fruits, which would result in the maximization of profits. The company contemplates growing Apples, Lemons, Oranges and Peaches.

	Apples	Lemons	Oranges	Peaches
Selling price per box (Rs)	15	15	30	45
Season's yield in boxes per acre	500	150	100	200
Cost: Material per acre (Rs)	270	105	90	150
Labour: growing per acre	300	225	150	195
Picking and packing per box	1.5	1.5	3	4.5
Transport per box	3	3	1.5	4.5

The fixed cost in each season would be:

Rs

Cultivation and growing 56000

Picking 42000

Transport 10000

Administration 84000

Land Revenue 18000

The following limitations are also placed before you:

1. The area available is 450 acres, but out of this 300 acres are suitable for growing only Oranges and Lemons. The balance of 150 acres is suitable for growing any of the four fruis viz., Apples, Lemons, Oranges and Peaches.

2. As the produce may be hypothecated to banks, area allotted for any fruit should be demarcated in complete acres and not in fractions of an acre.

3. The marketing strategy of the Company requires the compulsory production of all the four types of fruits in a season and the minimum quantity of any one type to be 18000 boxes.

Required - Calculate the total profit that would accrue if your advice is accepted.