D G H M 4 5 6 Variable Costs per Unit Contribution Margin Per Unit $560 $625 $375 $240 7 Assume that only 600 machine-hours are available daily for assembling engines. It takes 2 machine-hours to assemble 1 snowmobile 8 engine. It takes 5 machine hours to assemble 1 boat engine. 9 Assume that both the snowmobile and boat engines must be tested on a very expensive machine before they are shipped to 10 customers. Only 120 testing machine-hours are available daily for testing the engines. It takes 1 hour (60 minutes) to test each 11 snowmobile engine. It takes half an hour (30 minutes) to test each boat engine. 12 Assume that material shortages for boat engines will limit Power Engines to 110 boat engines per day. 13 14 What is the optimal production to maximize contribution margin for Power Engines? 15 16 STEP 1: Define the variables 17 18 19 20 21 STEP 2: Write out the Objective Function 22 23 24 25 26 STEP 3: Identity & formulate the constraints 27 29 30 Triumph Appendix Example Case 1 Case 2 Case 3 Ready D G H M 4 5 6 Variable Costs per Unit Contribution Margin Per Unit $560 $625 $375 $240 7 Assume that only 600 machine-hours are available daily for assembling engines. It takes 2 machine-hours to assemble 1 snowmobile 8 engine. It takes 5 machine hours to assemble 1 boat engine. 9 Assume that both the snowmobile and boat engines must be tested on a very expensive machine before they are shipped to 10 customers. Only 120 testing machine-hours are available daily for testing the engines. It takes 1 hour (60 minutes) to test each 11 snowmobile engine. It takes half an hour (30 minutes) to test each boat engine. 12 Assume that material shortages for boat engines will limit Power Engines to 110 boat engines per day. 13 14 What is the optimal production to maximize contribution margin for Power Engines? 15 16 STEP 1: Define the variables 17 18 19 20 21 STEP 2: Write out the Objective Function 22 23 24 25 26 STEP 3: Identity & formulate the constraints 27 29 30 Triumph Appendix Example Case 1 Case 2 Case 3 Ready