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Ray limited has three divisions which produce product A,B and C. The current survey, in 2021, shows that demand in million shillings for product A

  1. Ray limited has three divisions which produce product A,B and C. The current survey, in 2021, shows that demand in million shillings for product A is Ksh 300 while that of product B is Ksh 100 and that of product C is 200. The divisions are interdependent with historical data showing that:
  • For each sh200 of output, division A needs sh 4 worth of A, sh 40 worth of B and sh 20 worth of C.
  • For each sh200 of output, division B needs sh 4 worth of A, sh 2 worth of B and sh 4 worth of C.
  • For each sh200 of output, division C needs sh 20 worth of A and sh 2 worth of C.

As a consultant hired by Ray limited, you are required to advise the company on the level each division should produce in order to satisfy demand for year 2021. (7 Marks)

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