Green Gnome Ltd produces garden fertilisers. The fertilisers are made into pellets which are sold in 5-kilogram packets. The fertilisers are based on a basic mix of minerals and nutrients that make up 80% of each packet. To this basic mix are added special nutrients and minerals for special purpose fertilisers such as the lawn mix, the rose mix, the Australian native plant mix as well as a general mix, which is made up entirely of the basic mix.

Green Gnome Ltd can make up to 100 tonnes of the basic mix each year at a cost of $200 000 and it needs to decide how to divide this between its four product lines. To some extent this is determined by how many 5-kilogram packets the company can sell of each product line.

The following data is relevant.

Required

(a) Determine the most profitable mix of products given the amount of basic mix that can be produced each year and the estimated market for each product.

Transcribed Image Text:

Product General Mix Lawn Mix Rose Mix Australian Native Mix Cost of 1 kg of special nutrients and minerals Same as basic mix $3 $4 $3 Selling price per 5 kg packet $20 $26 $30 $20 Estimated maximum number of packets can sell 15000 packets 12 000 packets 8000 packets 12000 packets