Each morning, Nick McKnight stocks the drink case at Nick's Beach Hut in Charlotte, North Carolina. Nick's Beach Hut has 110 linear feet of refrigerated display space for cold drinks. Each linear foot can hold either five 12-ounce cans or three 20-ounce plastic or glass bottles.

The beverage stand sells three types of cold drinks:

1. GrandCola in 12-oz. cans for $1.55 per can

2. BoostSoda in 20-oz. plastic bottles for $1.80 per bottle

3. TobeCola in 20-oz. glass bottles for $2.10 per bottle Nick's

Beach Hut pays its suppliers the following:

1. $0.15 per 12-oz. can of grandcola

2. $0.45 per 20-oz. bottle of boostsoda

3. $0.65 per 20-oz. bottle of tobecola

Nick's Beach Hut's monthly fixed expenses include the following:

Hut rental. . . . . . . . . . . . . .	$365
Refrigerator rental. . . . .	60
Nick's salary. . . . . . . . . . .	1,600
Total fixed expenses. . . .	$2,025

Requirement 1. What is the constraining factor at Nick's Beach Hut? What should Nick stock to maximize profits? What is the maximum contribution margin he could generate from refrigerated drinks each day?

The constraining factor is (linear feet of shelf space / number of customers per day / number of grand-cola cans / number of boost-soda bottles / number of tobe-cola bottles) Nick's should stock the drink with the ( highest / lowest) contribution margin.

Complete the product mix analysis to determine which product would maximize

Nick's

profits.

Nick's Beach Hut
Product Mix Analysis
	grand-cola		boost-soda		tobe-cola
	12 oz. Cans		20 oz. Bottles		20 oz. Bottles
(Contribution margin: for equivalent number of direct labor hrs / Per linear foot of shelf space / per unit) (Fixed cost / Sales price / Variable : per unit) (Unit per linear foot of shelf space)
(Contribution margin: for equivalent number of direct labor hrs / Per linear foot of shelf space / per unit) (Fixed cost / Sales price / Variable : per unit) (Unit per linear foot of shelf space)
(Contribution margin: for equivalent number of direct labor hrs / Per linear foot of shelf space / per unit) (Fixed cost / Sales price / Variable : per unit) (Unit per linear foot of shelf space)
(Contribution margin: for equivalent number of direct labor hrs / Per linear foot of shelf space / per unit) (Fixed cost / Sales price / Variable : per unit) (Unit per linear foot of shelf space)	X		X		X
(Contribution margin: for equivalent number of direct labor hrs / Per linear foot of shelf space / per unit) (Fixed cost / Sales price / Variable : per unit) (Unit per linear foot of shelf space)

(Grand-Cola 12-oz. cans / Boost-Soda 20-oz. bottles/ Tobe-Cola 20-oz. bottles) has the highest contribution margin per linear foot of shelf space. To maximize profits,

Nick's should devote all its shelf space to (grand-cola 12-oz. cans / boost-soda 20-oz. bottles / tobe-cola 20-oz. bottles)

.

(Round your answer to the nearest whole dollar.)

The maximum contribution margin that Nick could generate each day from refrigerated drinks is ______

Requirement 2. To provide variety to customers, suppose Nick refuses to devote more than 75 linear feet and no less than 5 linear feet to any individual product. Under this condition, how many linear feet of each drink should be stocked? How many units of each product will be available for sale each day?

Show how Nick should stock his shelves, based on each product's contribution margin (CM):

1st stock maximum contraint of	(0,5,30,75,110)	linear ft. with product having the	(High, Middle, Low)	CM:	(Grand-Cola 12-oz. cans / Boost-Soda 20-oz. bottles/ Tobe-Cola 20-oz. bottles)
Next minimum constraint of	(0,5,30,75,110)	linear ft. with product having the	(High, Middle, Low)	CM:	(Grand-Cola 12-oz. cans / Boost-Soda 20-oz. bottles/ Tobe-Cola 20-oz. bottles)
Stock the remaining	(0,5,30,75,110)	linear ft. with product having the	(High, Middle, Low)	CM:	(Grand-Cola 12-oz. cans / Boost-Soda 20-oz. bottles/ Tobe-Cola 20-oz. bottles)

Now calculate the units available for sale based on the product mix determined above.

	Units for sale
grand-cola in 12 oz. cans:		cans
boost-soda in 20 oz. bottles:		bottles
tobe-cola in 20 oz. bottles:		bottles

Requirement 3. Assuming the product mix calculated in Requirement 2, what contribution margin will be generated from refrigerated drinks each day? (Round your answers to the nearest whole dollar.)

	Contribution Margin
grand-cola in 12 oz. cans:
boost-soda in 20 oz. bottles:
tobe-cola in 20 oz. bottles:
Total