Question
Red River Hot Tubs manufactures and sells two models of hot tubs: the Aqua-Spa and the Hydro-Lux. Chris Jones, the owner and manager of the
Red River Hot Tubs manufactures and sells two models of hot tubs: the Aqua-Spa and the Hydro-Lux. Chris Jones, the owner and manager of the company, needs to decide how many of each type of hot tub to produce during his next production cycle.
Chris buys prefabricated fiberglass hot tub shells from a local supplier and adds the pump and tubing to the shells to create his hot tubs. (This supplier has the capacity to deliver as many hot tub shells as Chris needs). Chris installs the same type of pump into both hot tubs. He will have only 180 pumps available during his next production cycle. From a manufacturing standpoint, the main difference between the two models of hot tubs is the amount of tubing and labor required.
Each Aqua-Spa requires 9 hours of labor and 12 feet of tubing. Each Hydro-Lux requires 6 hours of labor and 16 feet of tubing. Chris expects to have 1,566 production labor hours and 2,880 feet of tubing available during next production cycle. There is a minimum level of production for Hydro-Lux model - 25 tubs. Chris earns a profit of $250 on each Aqua-Spa he sells and $200 on each Hydro-Lux he sells. He is confident that he can sell all the hot tubs he produces.
The questions is, how many Aqua-Spas and Hydro-Luxes should Chris produce if he wants to maximize his profit during the next production cycle?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started