Reference no: EM132344831

Question

Gill Limited manufactures three products E, F and G. The products are all finished on the same machine. This is the only mechanized part of the process. During the next period the production manager is planning an essential major maintenance overhaul of the machine. This will restrict the available machine hours to 1,400 hours for the next period. The data for the three products is as follows.

E    £/unit   F   £/unit  G  £/unit

Selling price 30 17 21.00

Variable cost 13 6 9.00

Fixed production cost 10 8 6.00

Other fixed cost 2 1 3.50

Profit 5 2 2.50

Maximum demand (units/period) 250 140 130

No stocks are held.

Fixed production costs are absorbed using a machine hour rate of £2 per machine hour.

You are required to;

Determine the production plan that will maximize profit for the forthcoming period