BCD, Ltd. is a sports equipment manufacturer that owns and operates a number of manufacturing plants across the country. The company operates one particular plan where both footballs and basketballs are manufactured. While the company has some flexibility to move manufacturing effort between basketball and football production, the current processes do impose limits on the minimum and maximum number of each ball that can be produced. Production capacity, cost of materials, labor costs, manufacturing time, and other known constraints are provided below:

Production Capability and Constraints (All unit costs are in $ and time in hours):

Total Machine hours available: Min 39,000 – Max 40,000 hrs.

The number of basketballs that can be produced: Min 30,000 – Max 60,000

The number of footballs that can be produced: Min 20,000 – Max 40,000

Time to manufacture a Basketball: 0.5 hrs.

Time to manufacture a Football: 0.3 hrs.

Cost of labor -- 1 machine hour: $6.00

Cost of material-- 1 Basketball: $2.00

Cost of material-- 1 Football: $1.25

ABCD believes it can sell each basketball for $14.00 and each football for $11.00. Further, the company believes that cost of material and labor costs will not change over the next production cycle. The corporate tax rate is 28%. The company wants to determine the ideal number of basketballs and footballs to manufacture that will maximize the facility’s net profit after taxes.

Be sure to address all relevant points, discuss any assumptions you are making, and highlight the following items in your report: a recommendation for the number of basketballs and footballs to manufacture that maximizes net profit after taxes given the existing constraints; a discussion of which constraints are binding, and the amount of slack or surplus in the remaining constraints; and a list of recommendations as to what actions the company may take in the future to increase profitability, and how much extra profit the company might expect if the action is taken.

Answer rating: 100% (QA)

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