Determine product mix for retailer—two stocking scenarios (Learning Objective SJ Each morning, Max Imery stocks the drink case at Max’s Beach Hut in Myrtle Beach, South Carolina. Max’s Beach Hut has 100 linear feet of refrigerated display space for cold drinks. Each linear foot can hold either six 12-ounce cans or four 20-ounce plastic or glass bottles. Max’s Beach Hut sells three types of cold drinks:

1. Coca-Cola in 12-oz. cans for $1.50 per can 2. A&W Root Beer in 20-oz. plastic bottles for $1.75 per bottle 3. Mountian Dew in 20-oz. glass bottles for $2.20 per bottle Max’s Beach Hut pays its suppliers:

1. $0.25 per 12-oz. can of Coca-Cola 2. $0.40 per 20-oz. bottle of A&W Root Beer 3. $0.75 per 20-oz. bottle of Mountain Dew Max’s Beach Hut’s monthly fixed expenses include:

Max’s Beach Hut can sell all 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? What is the maximum contribution margin he could generate from refrigerated drinks each day?

2. To provide variety to customers, suppose Max refuses to devote more than 60 linear feet and no less than 10 linear feet to any individual product. Under this condition, how many linear feet of each drink should Max stock? How many units of each product will be available for sale each day?
3. Assuming the product mix calculated in Requirement 2, what contribution mar¬ gin will Max generate from refrigerated drinks each day?

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Hut rental..... Refrigerator rental Max's salary......... Total fixed expenses $ 375 75 1,550 $2,000