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A factory which makes tyres has a capacity to provide 19,800 hours of machine use. The factory makes all type A tyres or all type

  1. A factory which makes tyres has a capacity to provide 19,800 hours of machine use. The factory makes all type A tyres or all type B tyres or a mixture of the two types.

This was information available in one period.

Tyre type

A

B

Revenue and cost

Sh

Sh

Selling price

10

15

Variable Cost

8

12

Standard hours

3

4

Market conditions are such that no more than 4,000type A and 3,000 type B, can be sold per year. Annual fixed cost is Sh9,900.

Required: Compute the product mix to maximize the net income.

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