Product mix and special order decisions Orion Outdoors Company produces a standard model and a high-quality deluxe model of lightweight tents. Orion's workforce is organized into production teams responsible for cutting, stitching, and inspection activities. Orion has determined that its labor and support costs depend on the number of direct labor hours (cutting, stitching, and inspection), number of batches, and number of shipments. Production information is as follows:

Demand for standard and deluxe models is expected to be 6,000 and 3,000 tents, respectively. Direct labor time available for cutting, stitching, and inspection activities is 2,000 hours. The labor cost is \(\$ 12\) per hour, including fringe benefits, and shipping cost is \(\$ 15\) per shipment. Orion produces to demand and maintains no inventory on hand.
Required

a. Determine the production quantities for the two models that will maximize profits, assuming that it is not possible to change the number of available labor hours.

b. The sales manager has received an offer from Northlands Retail Company for 2,000 deluxe model tents at a price of \(\$ 18.50\) each. This order will be produced and shipped in batch sizes of 50 tents. Inspections for this order of deluxe model batches will take 2.5 hours per batch. Should Orion Outdoors Company accept this order if direct labor time is still restricted to 2,000 hours? What other qualitative factors should the company also consider?

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ITEM Direct labor time (cutting and stitching) per tent Average batch size Direct labor inspection time per batch Average size per shipment Selling price per tent Materials costs per tent STANDARD MODEL DELUXE MODEL 15 minutes 10 minutes 60 tents 30 tents 2 hours 2.5 hours 60 tents $10 $5 10 tents $20 $11