Determine the optimising plan

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Question - Siyi Ltd is a specialist engineering firm that makes four products, for which the following information is available:

 

A

B

C

D

Selling price per unit

£100

£64

£54

£62

Variable cost per unit

£50

£40

£42

£30

Weekly demand (units)

40

70

50

80

Machine hours per unit

5

2

3

4

Due to a recent market boom, demand is now outstripping the capacity of its plant, which is constrained to 500 hours machine time per week. In the medium-term, the management will consider expanding capacity but there remains a short-term problem of how to allocate the available capacity among the four products.

Required -

A) Determine the optimising plan for using the available machine hours in the short-term, and calculate the maximum achievable contribution.

B) Calculate the shortfall in contribution imposed by the constraint on machine hours, the maximum contribution in the absence of a machine hour constraint, and how many additional machine hours are required.

Reference no: EM132545885

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