10. Stickle Company manufactures two products (widgets and thingies), each of which must be processed on two different machines (Machine X and Machine Y). The machines run 16 hours per day. Production requirements are as follows:

Each widget sells for $50, and has direct materials costs of $15. Each thingie sells for $65, and has direct materials costs of $20. Currently, Stickle manufactures 17 widgets and 18 thingies per day. Demand is 30 widgets and 25 thingies per day.
Stickle could replace either machine with one that is more efficient. Either replacement would cost $400 per day in additional depreciation and maintenance expense, but would decrease all processing times by 20%.
Determine whether Stickle is using its production capacity wisely, and whether that capacity could or should be increased. Determine the optimum product mix given current production constraints, and given production constraints if changes are made.

Transcribed Image Text:

Widgets 15 minutes Machine X Machine Y 30 minutes Thingies 20 minutes 25 minutes