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Problem - Dali Sound Ltd. makes high-end headphones. Noise-cancelling headphones are one of its largest offerings & there is a bottleneck in the production line is in the area that installs the noise-cancelling components to their headphones. Their 'Active Noise Cancelling' technology is state-of-the-art, it's not easy to train workers for this task & the demand for this technology far exceeds Dali's capacity. Information concerning three of the companies noise-cancelling headphones is as follows:
Radiance
Stellia
Celestee
Selling price per unit
1,400
1,500
1,800
Variable cost per unit
800
1,000
1,200
Noise cancelling area time required to produce one unit
8 hrs.
5 hrs.
10 hrs.
1. If the decision was made to produce additional Celestee headphones (only) by paying my skilled workforce overtime wages to try & keep up with demand, what is the maximum I would be willing to pay per hour?
2. If Dali were to only produce one model going forward, which model would be most profitable?
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