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You are provided with the following information relating to the sales, estimated demands and production costs for each bench, table and chair. Bench Table Chair
You are provided with the following information relating to the sales, estimated demands and production costs for each bench, table and chair. Bench Table Chair 60 1,800 10 3 71 1,500 12 4 45 3,000 2 7 6 1 Estimated selling price Maximum demand Raw materials In units - timber - metal fittings - fabric Packing Each bench, table or chair involves in two separate stages of processin;g 2 2 The timber is machined, finished and assembled. Metal fittings are fixed 2.The products are painted and varnished to packaging in polythene and cardboard Labour costs are based on the following estimated time (in minutes) required for each processing stage Benches Tables Chairs Stage 1 180 150 60 Stage 2 20 60 40 The following rates for labour are applied Stage l Stage 2 per hour There are a maximum of 10,500 hours of labour available for stage 1. Required: (a) Advise the management the maximum output for each product and the total contribution of the proposed optimal production plan (b) Explain clearly the basis method used in (a) (c) Identify two factors that should be considered before a final decision is made. 4
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