FruitsForLife (Pty) Ltd produces two products (namely, guava jam and guava fruit rolls) and then resells them to local markets and retailers. Most of the products are sold to supermarkets that sell these products to the general public. The annual demand for both jam and fruit rolls is limited to 30 000 kg of each. The supply of fresh guavas by the supplier, Fresh-Foods Ltd, is limited to 18 000 kg per annum owing to competition from other large food-processing entities. Both products require preservative powder, which is limited to a supply of 1 000 kg per annum. There is an expected increase in competition from large food-processing entities for the supply of guavas and the emergence of substitute products for the jam in the foreseeable future. The marketing team has pointed out that there is a growing demand for FruitForLife (Pty) Ltds products in other parts of the continent. There are several small-medium suppliers of guavas in the Mpumalanga and Limpopo province. The selling price and standard cost for 1 kg of each of the products is as follows: Jam (R) Fruit roll (R) Selling price 60 50 Raw material 18 14 Variable production overhead 20 16 Fixed production overhead 10 10 Scarce ingredients included in the recipes are as follows: 1 kg Jam 1 kg Roll Guavas (per kg finished product) 0,6 kg 0,4 kg Preservatives (grams per kg finished product) 10 g 15 g

REQUIRED:

2.1. Discuss four possible qualitative factors that FruitsForLife (Pty) Ltd should consider in maximising profit. (4 marks)

2.2. Advise FruitsForLife (Pty) Ltd with regard to the production strategy that will maximise their profit. (12 marks)