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Each morning, Joe Stenback stocks the drink case at Joe's Beach Hut in Long Beach, California. Joe's Beach Hut has 110 linear feet of refrigerated display space for cold drinks. Each linear foot can hold elther seven 12-ounce cans or three 20-ounce plastic or glass bottles. (Click the icon to view the information on the cold drinks.) The beverage stand can sell all drinks stocked in the display case each morning. Read the requirements Requirement 1. What is the constraining factor at Joe's Beach Hut? What should Joe stock to maximize profits? What is the maximum contribution margin he could generate from refrigerated drinks each day? The constraining factor is linear feet of shelf space Joe's should stock the drink with the highest contribution margin. Complete the product mix analysis to determine which product would maximize Joe's profits. energy drink right-cola Joe's Beach Hut Product Mix Analysis cola-cola 12 oz. Cans $ 1.40 0.15 20 oz. Bottles 20 oz. Bottles Sales price per unit $ 1.75 0.45 2.25 0.70 Variable cost per unit Contribution margin per unit 1.25 1.55 Units per linear foot of shelf space 1.30 3 3.90 y Contribution margin per linear foot of shell space 8.75 $ $ 4.65 Cola-Cola 12-oz. cans has the highest contribution margin per linear foot of shelf space. To maximize profits, Joe's should devote all its shelf space to cola-cola 12-oz. cans . (Round your answer to the nearest whole dollar.) The maximum contribution margin that Joe could generate each day frorni refrigerated drinks is $ 963 Each morning, Joe Stenback stocks the drink case at Joe's Beach Hut in Long Beach, California. Joe's Beach Hut has 110 linear feet of refrigerated display space for cold drinks. Each linear foot can hold either seven 12-ounce cans or three 20-ounce plastic or glass bottles. (Click the icon to view the information on the cold drinks.) The beverage stand can sell all drinks stocked in the display case each morning. Read the requirements. Requirement 2. To provide variety to customers, suppose Joe refuses to devote more than 70 linear feet and no less than 5 linear feet to any individual product. Under this condition, how many linear feet of each drink should be stocked? How many units of each product will be available for sale each day? Show how Joe should stock his shelves, based on each product's contribution margin (CM): 1st stock maximum contraint of Next minimum constraint of 70 linear ft. with product having the 5 linear ft. with product having the 35 linear ft. with product having the highest CM: 12 oz. cans of cola-cola lowest CM 20 oz. bottles of energy drink middle CM: 20 oz. bottles of right-cola Stock the remaining Now calculate the units available for sale based on the product mix determined above. Units for sale cola-cola in 12 oz. cans: energy drink in 20 oz. botlles: right-cola in 20 oz. bottles: 490 cans 15 bottles 105 bottles Requirement 3. Assuming the product mix calculated in Requirement 2. what contribution margin will be generated from refrigerated drinks each day? (Round your answers to the nearest whole dollar.) Contribution Margin cola-cola in 12 oz. cans: energy drink in 20 oz. bottles right cola In 20 oz. bottles
