Each morning, Max Smith stocks the drink case at Max's Beach Hut in Myrtle Beach, South Carolina.
Question:
Max's Beach Hut sells three types of cold drinks:
1. Licious-Ade in 12-oz. cans for $1.40 per can
2. Licious-Ade in 20-oz. bottles for $1.90 per bottle
3. Pep-Cola in 20-oz. bottles for $2.20 per bottle
Max's Beach Hut pays its suppliers:
1. $0.20 per 12-oz. can of Licious-Ade
2. $0.35 per 20-oz. bottle of Licious-Ade
3. $0.55 per 20-oz. bottle of Pep-Cola
Max's Beach Hut's monthly fixed costs include:
Hut rental ............................. $ 355
Refrigerator rental ..................... 65
Max's salary ........................ 1,700
Total fixed costs .................. $ 2,120
Max's Beach Hut can sell all the drinks stocked in the display case each morning.
Requirements
1. What is Max's Beach Hut's constraining factor? What should Max stock to maximize profits?
2. Suppose Max's Beach Hut refuses to devote more than 80 linear feet to any individual product. Under this condition, how many linear feet of each drink should Max's stock? How many units of each product will be available for sale each day?
Stocks
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Related Book For
Horngrens Accounting
ISBN: 978-0134674681
12th edition
Authors: Tracie L. Miller nobles, Brenda L. Mattison, Ella Mae Matsumura
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