Namilk Ltd developed a new revolutionary product, by packaging strawberry and chocolate milkshakes in 500ml plastic...

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Namilk Ltd developed a new revolutionary product, by packaging strawberry and chocolate milkshakes in 500ml plastic bottles, and then selling it for N$10 a bottle. Recently, however, there had been several strikes by milk farmers, which gave rise to a giant shortage in milk supply. The milk regulator indicated to Namilk that they are only allowed to purchase four shipments of milk per month. A shipment carries 20 000 litres of milk and costs N$100 000. Each bottle manufactured requires 500ml of milk. The flavouring that is used to give the milkshakes that distinctive taste' contains a controlled substance that, according to the law, can only be acquired in limited quantities. Namilk has a permit to purchase nine tons of the flavouring per month. The current purchase price of the flavouring is N$40/kg. The chocolate and strawberry respectively require 50g and 90g of the flavouring per bottle. The milk and flavouring is mixed and bottled in a specialised machine that is operated at a cost of N$1 500 per hour. The machine has capacity to produce 1 000 bottles per hour. The milkshakes are packaged in plastic bottles that are purchased in crates of 50 bottles, at a cost of N$25 per crate. The company is running a promotion on chocolate milkshakes this month, and a non- cancellable order for 40 000 bottles of chocolate milkshakes has already been placed. The financial manager, Mrs K, wants to ensure that the company generates the maximum profit from the sale of milkshakes, in spite of the uncertainties in the milk industry. She, however, finished his studies a long while ago, and approached you for assistance. Required: Use the graphical method and determine the combination of chocolate and strawberry milkshakes to be made and sold in order to make optimum profits, by determining the profit at each extreme point in the feasible region. Round bottles down to the lower unit. E.g. 5.7 becomes 5. Namilk Ltd developed a new revolutionary product, by packaging strawberry and chocolate milkshakes in 500ml plastic bottles, and then selling it for N$10 a bottle. Recently, however, there had been several strikes by milk farmers, which gave rise to a giant shortage in milk supply. The milk regulator indicated to Namilk that they are only allowed to purchase four shipments of milk per month. A shipment carries 20 000 litres of milk and costs N$100 000. Each bottle manufactured requires 500ml of milk. The flavouring that is used to give the milkshakes that distinctive taste' contains a controlled substance that, according to the law, can only be acquired in limited quantities. Namilk has a permit to purchase nine tons of the flavouring per month. The current purchase price of the flavouring is N$40/kg. The chocolate and strawberry respectively require 50g and 90g of the flavouring per bottle. The milk and flavouring is mixed and bottled in a specialised machine that is operated at a cost of N$1 500 per hour. The machine has capacity to produce 1 000 bottles per hour. The milkshakes are packaged in plastic bottles that are purchased in crates of 50 bottles, at a cost of N$25 per crate. The company is running a promotion on chocolate milkshakes this month, and a non- cancellable order for 40 000 bottles of chocolate milkshakes has already been placed. The financial manager, Mrs K, wants to ensure that the company generates the maximum profit from the sale of milkshakes, in spite of the uncertainties in the milk industry. She, however, finished his studies a long while ago, and approached you for assistance. Required: Use the graphical method and determine the combination of chocolate and strawberry milkshakes to be made and sold in order to make optimum profits, by determining the profit at each extreme point in the feasible region. Round bottles down to the lower unit. E.g. 5.7 becomes 5.

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SOLUTION To determine the combination of chocolate and strawberry milkshakes that will result in max... View the full answer