Lizard Shoes makes two products: hiking boots and casual sandals. The contribution margin for hiking boots is $250/unit and for casual sandals is $130/unit. Each product requires the use of machinery for assembly and quality control testing. Lizard Shoes has 10,000 hours available for assembly. It takes 10 hours to assemble a pair of hiking boots and 25 hours to assemble a pair of sandals. Since the quality control testing is more manual, there are half the available hours compared to assembly. Hiking boots require 10 hours of quality testing and sandals only 5 hours. Due to limitations with hours, Lizard Shoes is trying to determine whether boots or sandals should be emphasized in order to provide maximum profitability for the company.

1. Write out the target cell equation and the constraint equations.

2. Use Excels Solver function to solver for the optimal product mix. Show the Solver Answer Report and Sensitivity Report.

3. What is the total contribution margin with this sales mix?

4. Suppose Lizard Shoes wants to relax the constraint in Testing. Up to what maximum amount per hour would the company be willing to pay?

5. By how much could the contribution margin of hiking boots increase before the sales mix changes?

6. List at least two qualitative factors that Lizard Shoes should consider in determining which product to emphasize and provide examples.