Exhibit 3 Resource Allocation Splashtown is dealing with some capacity challenges in their gum division. They currently produce three types of gum, Sugarbombs, Cherrysqueezes, and Sourblasters. They all use the same type of sour flavouring, Xsour, and there have been challenges getting that flavouring. The company is unsure of which to produce, and so have been basing their production on demand numbers (i.e. Sugarbombs first then the other two). Data is as follows: Sugarbombs Cherrysqueezes Sourblasters Selling price per bag $4.10 $6.75 $7.00 Demand (in bags) 2,000 1,000 1,000 Variable costs/bag $4.00 $3.50 $4.50 Fixed costs/bag $0.75 $0.50 $0.65 KG of Xsour per bag 0.02 kg/bag 0.10 kg/bag 0.05 kg/bag Minimum bags produced 100 100 100 The Xsour costs $5 per KG and Splashtown can only procure 180 KG of Xsour. Splashtown must produce a minimum of 100 bags of each type of gum. Mei is unsure how to proceed to determine the optimal production schedule subject to these constraints.

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