Sato Corporation assembles two products, Bleu and Verde, in Building A, which are then moved to Building B for sanding and painting. Building A has 30 employees, and Building B has 14 employees, each of whom works an 8-hour day. Each unit of Bleu takes 2 hours to assemble and 1 hour to sand and paint. Each unit of Verde takes 4 hours to assemble and 1 hour to sand and paint.

Currently, Sato manufactures 30 units of Bleu and 45 units of Verde each day. Demand for Bleu is 70 units per day, and demand for Verde is 180 units per day. Each unit of Bleu sells for $50, and each unit of Verde sells for $110. Direct materials cost $10 per unit for Bleu, and $40 per unit for Verde.

Sato is considering hiring an additional employee, but wants to assign the employee to the area with the most need. The employee will cost the company $130 per day in wages and benefits.

Determine whether Sato 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.

a. First, identify the constraints and determine their capacity. Stop—Check!

b. Next, identify ways of increasing capacity, and consider the costs and benefits of doing so. Stop—Check!

c. Then, determine the optimum product mix before making any changes. Stop—Check!

d. Finally, determine the optimum product mix if changes are made. Stop—Check!