Reference no: EM132560896

Lathorp Company produces three different pet carriers- in its manufacturing facility- X101, Y220 & Z450. Unit data for the three products follows:

	Products
	X101	Y220	2450
Selling Price	$90	$60	570
Variable Costs
Direct Materials	27	18	21
Labor and other costs	29	35	30
Estimated Demand	300 Units	275 Units	295 Units

All three products use the same direct materials, Metal. Metal costs $3 per pound and a maximum of 6,000 pounds is available each month. Lathorp must produce a minimum of 200 units of each product.

Question 1: How many units of product X101, Y220 and Z450 should Lathorp produce? 

Question 2: What is the maximum amount Lathorp would be willing to pay for another 500 pounds of metal? How many extra units they will be able to manufacture?

Question 3: Assume that 600 pounds of metal got spoiled due to an accident. Calculate the optimal product mix again in this situation.

Question 4: If the availability of materials worsen further, should Lathorp think of dropping the least profitable product? Why or why not? Explain briefly. Besides mention the qualitative factors that Lathrop can think about apart from quantitative factors while taking such decisions. Give your reasons.