Determine daily net revenue

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Reference no: EM1350387

Stanley Furniture produces two types of china cabinets, First Provincial (FP) and Deluxe Modern (DM). Each cabinet goes through 3 departments: carpentry, painting and finishing. The following table contains relevant information on production times per cabinet produced, daily production capacities for each department and net revenue per cabinet produced. Woodstock has a contract with its distributor to supply at least 60 units of each type of cabinet per day. The company would like to determine a product mix to maximize daily net revenue.

Department

Carpentry Painting Finishing Net Revenue
hrs/cabinet hrs./cabinet hrs./cabinet

s /cabinet
Cabinet type
FP 3 1.5 0.75 28
DM 2 1 0.75 25
Dept. capacity (hrs.) 360 200 125

Using Excel and the Excel Solver:

(a) What product mix maximizes daily net revenue, and what is daily net revenue?

(b) Stanley Furniture can purchase 30 additional hours of carpentry time for $20 per hour. Should the company purchase the additional time? Explain.

Reference no: EM1350387

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