Question
Problem 4: Use Excel what-if analysis or solver to solve the problems below. Pappy's Toys makes two models of a metal toyStandard and DeLuxe. Both
Problem 4: Use Excel what-if analysis or solver to solve the problems below.
Pappy's Toys makes two models of a metal toyStandard and DeLuxe. Both models are produced on a single machine. The price and costs of the two models appear as follows.
| Standard | DeLuxe | ||||||
| Price per unit | $ | 40 | $ | 60 | |||
| Variable cost per unit | $ | 20 | $ | 24 | |||
| Machine hours per unit | 0.5 | 1.5 |
The one machine that used to produce both models has a capacity of 90,000 machine-hours per quarter. Fixed manufacturing costs per quarter are $800,000. Pappys has signed a contract with local schools to sell 20,000 units of the Standard model to them next quarter.
Required:
a. How many units of each model should Pappy's produce next quarter in order to maximize its profits?
b. Would the optimal product mix change if sales price of DeLuxe change to $85 per unit? Please answer this question without rerunning solver.
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