Analyzing Profitability Considering a Scarce Resource

Assume that Innovative Components Inc. produces only three different types of injection$-$molded knobs. It produces the Pointer Knob, which is used for on$/$off devices, the Instrument Knob, which is used for precision

adjustment, and the Star Knob, which is used for snowblowers and lawnmowers. The factory machine capacity is the companys constraining resource. It operates at $90\%$ capacity and management wants to devote the

unued capacity to one of the products. The following data represents the current operations.

$*$Allogered on basis of machine hours at $$2$ per machine hour.

REQUIRED

Which product should management produce with its extra capacity?