Presently demand exceeds capacity and Apex has capacity constraints. There are three production lines that operate 24 hours a day for 360 days per year (25,920 hours), which leaves fives days a year for maintenance. All three products go through the same work centres in roughly the same sequence. Some work centres create bottlenecks since they have less capacity than other centres

Demand (in units) ,Revenue Variable, costs Allocated fixed costs, Operating income, Time in production (minutes).

Product A 100.000 $150 $80 $60 $10 4

Product B 300,000 $85 $40 $25 $20 3

Product C 500,000 $55 $15 $25 $15 2

 

Required:

1) Recommend how to maximize profits by calculating the optimal product mix. State how many of each product should Apex produce?

 

2) What should Apex do to better manage the constrained production centres?