J19 X Jxx A B C D E F G H K L M 1 Differential Analysis 2 Jay Moody is a home builder in Lafayette, CA. Moody has three models of home that he builds: the 2,000 sq ft Montana, the 3,000 sq ft Chicago, and the 5,000 sq ft Benedict. 3 Recent demand for lumber has limited Moody's ability to obtain a key resource. His normal supplier was only able to offer 5,000 board feet of lumber (at $500 per foot) this month. 4 All other resources needed for production are in plentiful supply. Moody must decide how to order the company's production. 5 Production information related to the three styles of home is shown below: 6 7 Montana Chicago Benedict 8 Sales price of home $500,000 $800,000 $1,750,000 9 Variable cost per home (includes $500 per board foot of lumber) $400,000 $500,000 $1,050,000 10 Board feet required per home 200 400 500 11 Monthly demand for each home (i.e., number of units that can be sold) 10 7 6 12 13 Additional information: Burton incurs $1,000,000 in fixed costs each month. 14 15 A second supplier has approach Moody with an offer to sell him additional board feet of lumber. Moody can select one (and only one) of the following contract terms: 16 a) 800 board feet at $1,200 per foot 17 b) 2,000 board feet at $1, 150- per foot 18 19 What is the maximum profit that Moody can make this month? 20 21 22 23 +