Problem Statement

The Pyrotec Company produces three electrical products $-$ clocks, radios, and toasters. These products have the following resource requirements:

Resource Requirements

$\backslash$table$[[,$Cost$/$Unit$,$Labor Hours$/$Unit$],[$Clock$,$$$7,2],[$Radio$,10,3],[$Toaster$,5,2]]$

The manufacturer has a daily production budget of $$2,000$ and a maximum of $660$ hours of labor. Maximum daily customer demand is for $200$ clocks, $300$ radios, and $150$ toasters. Clocks sell for $$15,$ radios for $$20,$ and toasters for $$12.$ The company wants to know the optimal product mix that will maximize profit.

Answer the following questions:

What constraint is binding?

If the company may invest in only one resource, what should they invest in$?$

If you invested in the resource you stated above, what would be the return on investment on each additional unit of the resource?

If they had some spare funds to spend on advertising in hopes of increasing the demand for the target product, which product should they spend the money on$?$

How much advertising expense may be justified on each extra product sold as a result of such advertising?

If you are able to increase the selling price on clocks to $$1\mathrm{.}50/$clock$,$ would you make more clocks?

If the prices on radios increase by $$1\mathrm{.}50/$radio$,$ would you make more radios?

The production manager thinks that to increase the production and profit, they should hire more labor. Do you think there is merit in such advice?

The finance manager thinks that to increase the production and profit, they should raise more capital to increase the budget. Do you think there is merit in such advice?