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Patuxent Electronics, Inc. sells ten types of telecom components (C). The company has recently expanded its business and is able to manufacture (and sell) three types of intermediate modules and two types of finished products using the company's available inventory of telecom components. The bill of materials (BOM) below, shows the required components to assemble each module (M) and finished product (P).

Components:

C1, C2, C3, C4, C5, C6, C7, C8, C9, C10

Modules:

M1: C1, C3, C5, C8

M2: C4, C6

M3: C2, C9

Products:

P1: C1, C2, C3, C9, C10

P2: C1, C4, C6, C5, C8

Patuxent incurs negligible costs while selling the components; we will assume those to be zero. But there is a cost associated with the manufacturing of the modules and the products. The per unit cost of each is given below:

In addition, the selling price for the components, modules, and finished products is shown below. Likewise, the available inventory for the components is also provided. There is no starting inventory for the modules and the products.

1. a. What is the profit-maximizing mix of sellable entities (components, modules, and products) for Patuxent and how much of each should it sell?

1. b. The company wants to avoid taking too much risk by selling multiple types of modules and products. Leadership has decided that it will consider selling at most 1 type from among the modules and products (collectively across the 5 entities). What is the profit-maximizing strategy in that case?

M1 M2 M3 P1 P2 $ 6.00 $ 8.00 $ 13.00 $ 14.00 $ 15.00 C1 C2 C3 C4 C5 C6 C7 C8 C9 C10 M1 M2 M3 P1 P2 2 3 4 2 3 7 4 3 2 00 15 18 20 32 35 Unit Price (in $) Inventory 10 15 20 10 15 35 20 15 10 40