The Nutmeg Corporation produces three different products, each in a 1-pound can: Almond-Lovers Mix, Walnut-Lovers Mix, and the Thrifty Mix.
Three types of nuts are used in Nutmeg’s products: almonds, walnuts, and peanuts. Nutmeg currently has 350 pounds of almonds, 150 pounds of walnuts, and 1,000 pounds of peanuts. Each of Nutmeg’s products must contain a certain percentage of each type of nut, as shown in the following table. The table also shows the revenue per can as well as the cost per pound to purchase nuts.

a. Given Nutmeg’s current stock of nuts, how many cans of each product should be produced to maximize revenue?
b. Does the solution you developed in part (a) change if Nutmeg is interested in maximizing contribution margin (defined as revenue per unit - raw material cost)?

c. If 50 additional pounds of walnuts became available, how would your contribution-margin maximizing solution from part (b) change?

Transcribed Image Text:

Almond-Lovers Mix Walnut-Lovers Mix Thrifty Mix Cost per pound PERCENTAGE REQUIREMENTS PER CAN Almonds Walnuts Peanuts 80% 20% 0% 20% 80% 0% 10% 10% 80% $4.50 $6.00 $3.00 Revenue per Can $8.00 $10.00 $4.50