Question
Gretzky Inc. produces three types of hockey sticks. Data concerning the selling prices and unit costs of the three hockey sticks appear below: Composite Fibreglass
Gretzky Inc. produces three types of hockey sticks. Data concerning the selling prices and unit costs of the three hockey sticks appear below:
| Composite | Fibreglass | Carbon Fibre |
Weekly demand (units) | 120 | 180 | 150 |
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Selling price | $320 | $160 | $300 |
Variable costs | 150 | 55 | 145 |
Fixed costs | 25 | 18 | 50 |
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Blade bending machine time | 10 min. | 5 min. | 7 min. |
Fixed costs are applied to the products based on direct labour hours. Demand for the three hockey sticks exceeds the company's productive capacity. The blade bending machine is the constraint, with only 2,400 minutes of blade bending machine time available/week.
Required:
- Given the blade bending machine constraint, which product should be emphasized? Support your answer with appropriate calculations. (5 marks)
- Given the blade bending constraint of 2,400 minutes per week and the weekly demand, what is the optimal production plan for the week? (3 marks)
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