Question: Power Engines assembles two engines, a snowmobile engine and a boat engine. Information on these two products is as follows: Snowmobile Engine Boat Engine Selling
Power Engines assembles two engines, a snowmobile engine and a boat engine. Information on these two products is as follows: Snowmobile Engine Boat Engine Selling Price $800 $1,000 Variable Costs per Unit $560 $625 Contribution Margin Per Unit $240 $375 "Assume that only 600 machine-hours are available daily for assembling engines. It takes 2 machine-hours to assemble 1 snowmobile engine. It takes 5 machine-hours to assemble 1 boat engine. Assume that both the snowmobile and boat engines must be tested on a very expensive machine before they are shipped to customers. Only 120 testing machine-hours are available daily for testing the engines. It takes 1 hour (60 minutes) to test each snowmobile engine. It takes half an hour (30 minutes) to test each boat engine. Assume that material shortages for boat engines will limit Power Engines to 110 boat engines per day." What is the optimal production to maximize contribution margin for Power Engines? STEP 1: Define the variables STEP 2: Write out the Objective Function STEP 3: Identify & formulate the constraints STEP 4: Build Model STEP 5: Solve and interpret results
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