Question
Question 1 (15 marks) Marty, the marketing manager, would like you to assist in providing information for a marketing strategy he is proposing at the
Question 1 (15 marks)
Marty, the marketing manager, would like you to assist in providing information for a marketing strategy he is proposing at the annual general meeting next month. He is focusing only on the maca-sponge and wants to know the optimal product mix. Below is an estimate of the costs of the three sizes of the maca-sponge.
| Maca-Sponge Sizes | ||||
|
| 1.5kg | 800 gram | 300gram | |
| Selling Price | $30.00 | $25.00 | $19.00 | |
|
|
|
|
| |
| Costs: |
|
|
| |
|
| Raw materials | $10.00 | $8.00 | $3.00 |
|
| Direct labour | $7.00 | $4.00 | $2.00 |
|
| Overhead | $5.00 | $4.00 | $2.80 |
|
| Selling and Admin | $3.00 | $2.50 | $2.20 |
Each of the three products goes through the same manufacturing process which consists of mixing, spreading, cooking and then packaging ready to be sold. The time for each process, in minutes, is in the table below.
| Mixing | Spreading | Cooking | Packaging | |
| HOURS REQUIRED | ||||
| 1.5 kg | 4 | 8 | 30 | 3 |
| 800 gram | 10 | 3 | 20 | 2 |
| 300 gram | 8 | 8 | 20 | 2 |
| HOURS AVAILABLE | 8,000 | 12,000 | 100,000 | 10,000 |
Required:
- Formulate a linear program to determine the expected mix of maca-sponge, ensuring that the maximum profit is obtained. (8 marks)
- State the optimal mix and resulting profit. Discuss your results (7 marks)
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Cutting Edge Internal Auditing
Authors: Jeffrey Ridley
1st Edition
0470510390, 978-0470510391
