performance management

Section C - Both 2 questions are mandatory and MUST be answered Each question carries 20 marks. 1) Justin Ltd produces and sells to customers three types of products: AR1, GL2, and HT3. Each product comprises two bought-in components A and B imported abroad. Variable costs and selling prices for the products are as follows: Market research indicated the expected demand for the next month 11,500, 9,600 and 2,800 units of products AR1s, GL.s and HT3s respectively. The total fixed cost for the next month is forecasted to be $3,500. Supplies of component B in the following month are limited to maximum of 12,500 grams because of industrial action at a major producer of the component. Justin Ltd has just received an order from Robin Ltd to delivery 6,000 units of HT3s each month, at a discount price of 56.35. It is not included in expected demand for product HT3. Despite of difficulties Justin feels that contract must be fulfilled to ensure future business. Required: a) Determine the deficit of component B, optimum production schedule and the total profit of company for the coming month, assuming that Justin will fulfill the contract with Robin Ltd. (8 marics) After several months the demand for product AR1 and GLZ has increased dramatically to 18,000 and 16,000 units per month respectively. fully satisfy demand for all three products. Labour disputes will restrict productive hours to 4,200. After experiencing trouble with supplies of components B, A, and labour force, Justin has lost the contract with fobin Ltd and decided to stop the production of HT3. Required: b) Formulate a linear programming model that could be used to determine the production units of each product in the following period so as to maximize profit. (4 markss)