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How many units of each product should be produced

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Problem - A firm manufactures two products, A and B. There is only one machine with 3000 hours available per year. Each unit of product A requires 4 machine hours while each unit of Product B requires 3 machine hours. A summary of the profitability of each product is provided below.

 

Product A

Product B

Selling price

$150

$120

Costs: Direct material

$60

$15

Direct labour

$15

$25

Variable overhead

$15

$20

Maximum yearly demand for Products A is 600 units and for Product B is 800 units. Determine how many units of each product should be produced to maximise yearly profit.

Reference no: EM132976638

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