Question: Each morning Ned Steiner stocks the drink case at Ned s

Each morning, Ned Steiner stocks the drink case at Ned’s Beach Hut in Myrtle Beach, South Carolina. The drink case has 115 linear feet of refrigerated drink space. Each linear foot can hold either six 12- ounce cans or three 20- ounce bottles. Ned’s Beach Hut sells three types of cold drinks:
1. Yummy Time in 12- oz. cans for .......... $ 1.45 per can
2. Yummy Time in 20- oz. bottles for .......... $ 1.75 per bottle
3. Pretty Pop in 20- oz. bottles for .......... ... $ 2.30 per bottle
Ned’s Beach Hut pays its suppliers:
1. $ 0.15 per 12- oz. can of Yummy Time
2. $ 0.35 per 20- oz. bottle of Yummy Time
3. $ 0.65 per 20- oz. bottle of Pretty Pop Ned’s Beach Hut’s monthly fixed costs include:
Hut rental .......... $ 360
Refrigerator rental....... 80
Ned’s salary......... 1,500
Total fixed costs....... $ 1,940
Ned’s Beach Hut can sell all the drinks stocked in the display case each morning.

1. What is Ned’s Beach Hut’s constraining factor? What should Ned stock to ­maximize profits?
2. Suppose Ned’s Beach Hut refuses to devote more than 75 linear feet to any individual product. Under this condition, how many linear feet of each drink should Ned’s stock? How many units of each product will be available for sale each day?

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  • CreatedJanuary 16, 2015
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