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Ennerdale Manufacturing currently produces and sells five different products. Total demand for the products exceeds the firm's capacity to produce all of them. The constraint
Ennerdale Manufacturing currently produces and sells five different products. Total demand for the products exceeds the firm's capacity to produce all of them. The constraint on production is the time available on a special machine. Data on the products and time required on the special machine are summarized in the following table Product Selling Price Variable Manufacturing Cost S8 Variable Marketing Cost Machine Hours Required per Unit Maximum Unit demand per 10,000 7,500 20,000 1,5002,000 Period WX $12 S15 S18 S24 S32 S9S11 S12 S18 S2S6 0.3 0.25 0.5 0.4 S1 The firm has only 5,500 hours of time available on the special machine per period. Fixed costs are $110,000 per period REQUIRED 1. How many units of each product should the firm produce and sell to maximize income? 2. Identify reasons why the managers cannot be certain that they have accurately estimated the following for each product: selling price, variable costs, machine hours needed per unit, and maximum unit demand per period. 3. Discuss how the business risks in Part F might affect the managers' production decisions
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