Question: Emily developed an innovative computer game called Home By Myself

Emily developed an innovative computer game, called Home By Myself (HBM). It was so successful that she quickly followed up with two sequels: Home By Myself II (HBM2) and Home By Myself III (HBM3). The costs of developing the games were $95,000 for HBM, $10,000 for HBM2, and $15,000 for HBM3.
The production process consists of copying the games to blank DVDs using her computer and then packing them with printed instructions in a display box. It takes longer to copy the original game than the sequels. Emily can produce, ready for shipping, about 20 copies of HBM, 30 copies of HBM2, or 45 copies of HBM3 in an hour.

A. What is the contribution margin per hour of Emily’s time for each game?
B. In what order should Emily produce the games?
C. Using the quantitative decision rule for constrained capacity, what is the most Emily should be willing to pay per hour for a worker to duplicate and pack DVDs after her normal working hours? (Assume that the worker would work at the same pace asEmily.)

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  • CreatedJanuary 26, 2015
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