Question
Inc. produces three products. Data concerning the selling prices and unit costs of the three products appear below: A B C Selling price $50 $74
Inc. produces three products. Data concerning the selling prices and unit costs of the three products appear below:
A | B | C | |
Selling price | $50 | $74 | $70 |
Variable costs | $40 | $50 | $55 |
Fixed costs | $15 | $20 | $12 |
Milling machine time (minutes) | 4 | 6 | 3 |
Demand for the three products exceeds the company's productive capacity. The milling machine is the constraint, with only 2,400 minutes of milling machine time available this week.
A) Given the milling machine constraint, what is the order in which products should be emphasized (from most profitable to least profitable)?
B) Assume that sufficient constraint time is available to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay, per minute, to acquire more of the constrained resource?
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