Answer to Question #262621 in Microeconomics for Shivendra

Question

Estimated the maximum potential sales for each product in the next quarter. Finally, the

accounting department has provided some data showing the profit contributions on each product.

The decision problem is to determine the product mix, that is, to maximise Ram's Furniture

Company's profit for the quarter by choosing production quantities for the chairs, desks and

tables. The table below summarises the parameters of the problems.

Hours per Unit

Department Chairs Desks Tables Hours

Available

Fabrication 4 6 2 1,850

Assembly 3 5 7 2,400

Shipping 3 2 4 1,500

Demand

Potential 360 300 100

Profit $15 $24 $18

What would happen if the profit contribution for chairs reaches $16.00 and

subsequently when it reaches $21.00? Show tabulated results and working

Answer 1

Solving using excel: