Simitli Inc. makes tables from a very rare and expensive type of wood. The wood costs $100 per meter.
Simitli pays its employees $6 per hour. They produce 3 kinds of tables:
The Executive Table which sells for $750, takes 15 hours to make and requires 4 meters of wood.
The President Table which sells for $850, takes 20 hours to make and requires 4.5 meters of wood
The King Table which sells for $1050, takes 22 hours to make and requires 5 meters of wood.
Demand of the Executive is 400, the President 250 and the King 320 per year.
Fixed costs are $200,000 per year.
The government has set clear rules on the usage of this very rary type of wood. It allows an indivdual
company to use a maximum of 3000 meters of this wood per year.
Required:
a) Advise Simitli how to maximize profit. Which to produce first and how many units of each. (34 points)
b) Calculate the possible forecasted profit (8 points)
c) What other other options does Simitli have to increase production? Give at least three. (18 points)