Question

Each morning, Joel Rowe stocks the drink case at Joel’s Beach Hut in Myrtle Beach, South Carolina. The drink case has 100 linear feet of refrigerated drink space. Each linear foot can hold either six 12-ounce cans or three 20-ounce bottles.
Joel’s Beach Hut sells three types of cold drinks:
1. Licious-Ade in 12-oz. cans for $1.30 per can
2. Licious-Ade in 20-oz. bottles for $1.70 per bottle
3. Pep-Cola in 20-oz. bottles for $2.30 per bottle
Joel’s Beach Hut pays its suppliers:
1. $0.45 per 12-oz. can of Licious-Ade
2. $0.60 per 20-oz. bottle of Licious-Ade
3. $0.90 per 20-oz. bottle of Pep-Cola
Joel’s Beach Hut’s monthly fixed costs include:
Hut rental........................................ $ 385
Refrigerator rental........................... 75
Joel’s salary..................................... 1,650
Total fixed costs.............................. $ 2,110
Joel’s Beach Hut can sell all the drinks stocked in the display case each morning.
Requirements
1. What is Joel’s Beach Hut’s constraining factor? What should Joel stock to maximize profits?
2. Suppose Joel’s Beach Hut refuses to devote more than 65 linear feet to any individual product. Under this condition, how many linear feet of each drink should Joel’s stock? How many units of each product will be available for sale each day?


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  • CreatedJune 15, 2015
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