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DECISIONS WITH LIMITED CAPACITY ABCD forecasts a production capacity shortage, in machine-hours, for the coming month. The company manager has received a note from the
"DECISIONS WITH LIMITED CAPACITY
ABCD forecasts a production capacity shortage, in machine-hours, for the coming month.
The company manager has received a note from the production department informing him that they will only have 22,000 machine-hours.
In view of this data and the budget that is presented below, the manager wants production to focus on the most profitable products.
| Product | 1 | 2 | 3 | 4 | 5 |
| Materials (/U) | 400 | 350 | 600 | 200 | 500 |
| Labor (/U) | 200 | 150 | 400 | 500 | 300 |
| Variable general expenses (/U) | 250 | 200 | 500 | 600 | 350 |
| Sales (/U) | 1200 | 1000 | 1900 | 1500 | 1450 |
| Machine hours (HM)/U | 2 | 1.5 | 3 | 0.5 | 1 |
| Material consumed (Kg) | 2.5 | 1.5 | 1 | 2 | 2 |
| Labor hours | 1.4 | 2 | 2 | 1.6 | 3 |
| Max Demand (Unit) | 4000 | 6000 | 2000 | 10000 | 7000 |
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