Question: Short Term Decision Making On Your Own #3 Solution Color Inc. can sell as many units of its two products, Blue and Red, as

Short Term Decision Making On Your Own #3 Solution Color Inc. can

Short Term Decision Making On Your Own #3 Solution Color Inc. can sell as many units of its two products, Blue and Red, as it can produce, but it has limited resources. It can produce 2 units of Blue per hour or 3 units of Red per hour. Color Inc. only has 1,000 production hours per month available. Selling price of Blue is $10; selling price of Red is $9. Variable costs for Blue and Red are $6 each. What is the most profitable mix of Blue and Red for this company? Units produced/hour SP VC CM CM/Hour Blue Red 2 10 6 4 8 3 9 6 9 Because RED has a higher CM/hour (limited resource), Color Inc. should produce all RED.

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