Question
XYZ Co. manufactures two types of toilet paper: ultra-strong and ultra-soft. Because of a recent shortage of chlorine-based bleach, a key ingredient needed for the
XYZ Co. manufactures two types of toilet paper: ultra-strong and ultra-soft. Because of a recent shortage of chlorine-based bleach, a key ingredient needed for the two products, the company has to decide what amount of each product would be most advantageous to produce. Information related to the two products that use chlorine-based bleach are shown below:
Ultra-strong
Ultra-soft
Contribution margin per case
$25
$28
Contribution margin ratio
50%
70%
Chlorine-based bleachrequired per case (in liters)
5
7
Maximum monthly demand (in cases)
unlimited
unlimited
Assume thatXYZ Co. only has 3,500 liters ofChlorine-based bleachavailable next month. What is the maximum amount of contribution margin that the company can generate next month from the two products above given the shortage ofChlorine-based bleach?
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