Scenario: 2

Comfort Shoes is a manufacturing company producing different types of shoes. Walking Shoes, Spikes which are used by athletes, and Strong Shoes which are used by Mounters. All three types of shoes are manufactured using the same resources. The following information is available about the price and resources used for manufacturing all three products.

Particulars	Walking Shoes (WS)	Spikes (SP)	Strong Shoes (SS)
	OMR	OMR	OMR
Selling Price per pair	30 to 34	22.5 to 26.5	26 to 30
Material cost (RO 2.5 per meter)	3.75(1.5meter)	1.5(0.6meter)	3(1.2 meters)
Direct Labour (OMR 3.5 per hour)	3.5(1Hour)	5.25(1.5 hours)	3.5(1 hour)
Machine Hours (OMR 5 per hour)	2.00(0.8 MH)	1.00(0.2MH)	1.5(0.3MH)
Expected Demand for April (Pairs of Shoes)	1150	700	825

The company has got a special order of 100 pairs for each product from Run world company who are their regular customers but at a discount price of OMR 4 for each product. This special order is not included in the above demand.

Comfort Shoes generally has sufficient resources to meet the demand but because of the limited supply from their regular supplier, the company has the following resources available for the month of April.

Direct Material	3600 Meters
Direct labor	3450 Hours
Machine Hours	Choose between 1200- 1250 Hours*

Question 2:

Required:

a) What do you understand by limiting factor, evaluate the concept of outsourcing when resources are limited? 3 Marks

b) Calculate the optimum production Plan for the Comfort shoe company for the month of April, assuming that the special order of the regular customer will be supplied in full. 8 Marks

c) What is the total contribution for the month of April? 4 Marks

Note: Please show all the relevant steps of the mathematical calculations in detail (using a Word document).