Davy Company sells three popular brands of cookies: Davy, Cathy, Susan. Each brand of cookie goes through three processes (P1, P2, and P3). The company can sell all of its daily production of the cookies, Fractional batches are not allowed. The batch times for producing each brand of cookie, the minutes available per day, and operating income appear below.

a. What is the optimal number of batches for the three cookies

b. What is the maximum contribution margin? 

 

Transcribed Image Text:

Processing Time (minutes) Process Davy Cathy Susan Max Time P1 1 2 3 P2 2 4 P3 5 3 2 Revenue. Variable cost Fixed cost Operating Income 3 Operating Income per batch Davy Cathy Susan Total $900 $950 $1000 $2850 475 500 1425 450 167 175 500 $308 $325 $925 30 50 60 158 $292 Processing Time (minutes) Process Davy Cathy Susan Max Time P1 1 2 3 P2 2 4 P3 5 3 2 Revenue. Variable cost Fixed cost Operating Income 3 Operating Income per batch Davy Cathy Susan Total $900 $950 $1000 $2850 475 500 1425 450 167 175 500 $308 $325 $925 30 50 60 158 $292

Answer rating: 100% (QA)

Ans Let us assume that number of batches of Davy Cathy and Susan be X1 X2 and X3 respectively The problem is summarised in form of LLP as below Max Z 292 x 1 308 x 2 325 x 3 subject to x 1 2 x 2 3 x 3 ... View the full answer