ach morning, Joel Rowe stocks the drink case at Joel's

Beach Hut in Myrtle Beach, South Carolina. The drink case has 100 linear feet of refrigerated drink space. Each linear foot can hold either six 12-ounce cans or three 20-ounce bottles.

Joel's Beach Hut sells three types of cold drinks:
	1.	Licious minus AdeLiciousAde in 12-oz. cans for $1.30 per can
	2.	Licious minus Ade in 20-oz. bottles for $1.70per bottle
	3.	Pep minus ColaPepCola in 20-oz. bottles for $2.30 per bottle
Joel's Beach Hut pays its suppliers:
	1.	$0.45 per 12-oz. can of Licious minus AdeLiciousAde
	2.	$0.60 per 20-oz. bottle of Licious minus AdeLiciousAde
	3.	$0.90 per 20-oz. bottle of Pep minus ColaPepCola
Joel's Beach Hut's monthly fixed costs include:

Hut rental	$385
Refrigerator rental	75
Joel's salary	1,650
Total fixed costs	$2,110

Requirement 1. What is Joel's Beach Hut's constraining factor? What should Joel

stock to maximize profits?

The constraining factor is

linear feet of shelf space

number of customers per day

number of Licious-Ade cans

number of Licious-Ade bottles

number of Pep-Cola bottles

.

What should

Joel stock to maximize profits?

Complete the product mix analysis to determine which product would maximize

Joel's

profits.

	Licious-Ade		Licious-Ade		Pep-Cola
	12 oz. Cans		20 oz. Bottles		20 oz. Bottles
Sales price per unit
Variable cost per unit
Contribution margin per unit
Units per linear foot of shelf space	x		x		x
Contribution margin per linear foot of shelf space

Decision: Stock

an equal number of each product

all 12 oz. cans of Licious-Ade

all 20 oz. bottles of Licious-Ade

all 20 oz bottles of Pep-Cola

.

Requirement 2. Suppose Joel'sBeach Hut refuses to devote more than 65

linear feet to any individual product. Under this condition, how many linear feet of each drink should Joel's

stock? How many units of each product will be available for sale each day? (Abbreviation used: CM = contribution margin.)

Joel's

Beach Hut should stock its shelves as follows:

First stock		linear feet with the product that has the		CM per linear foot
Next stock		linear feet with the product that has the		CM per linear foot

How many units of each product will be available for sale each day based on the product mixed determined in the preceding step? (For entries with a $0 balance, make sure to enter "0" in the appropriate cell.)

	Units for sale
Licious-Ade in 12 oz. cans:		cans
Licious-Ade in 20 oz. bottles:		bottles
Pep-Cola in 20 oz. bottles:		bottles