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3. Uni Merch plc manufactures and sells merchandising for Universities. Their best-selling product is a sweater that can be customised with any University logo.
3. Uni Merch plc manufactures and sells merchandising for Universities. Their best-selling product is a sweater that can be customised with any University logo. The company purchases materials in bulk to benefit from discounts and produces basic sweaters in bulk. Once a University places an order the basic product gets dyed and a logo is printed on to the sweater. To produce one sweater you need on average 2 square metres of fabric, 3 metres of thread, and 0.2 litres of fabric dye. The cost for a square metre of fabric is 8, for a metre of thread is 2, and for a litre of dye the cost is 15. To receive a discount the company needs to purchase 1000 square metres of fabric, 5000 metres of thread and 200 litres of dye, so the company purchases these amounts each month to receive 10% off each item. The expected demand for sweaters in the coming 5 months is given below: June July August September October 300 sweaters 200 sweaters 100 sweaters 900 sweaters 800 sweaters Opening inventory for June is provided below: Basic sweaters (no logo) Fabric 300 sweaters 200 square metres 4000 metres Thread Dye 100 litres Since the company produces in bulk, the company will always use the full machine capacity to produce. Production capacity for the coming 5 months is provided below. June July August September October 500 sweaters 400 sweaters 400 sweaters 500 sweaters 500 sweaters
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