A) LP Antique Furniture
Q1. Optimum desegregate of chairs to maximize contribution margin.
increment: 35 x Applewood +50 x Bentwood
shade: office gross profit for Applewood $35 = $ cx - $85
parcel Margin for Bentwood $50 = $110 - $70
Constraints:
1) Machine Hour: 2 x Applewood + 3 x Bentwood <= 1,200
2) Assembly Labour: 3 x Applewood + 2 x Bentwood <= 1,400
3) Material:1 x Applewood + 0 x Bentwood <= 400
4) actual suppose:0 x Applewood + 1 x Bentwood => 50
Results: to maximize contribution margin the smart set has to produce 360 Applewood model and clx Bentwood model as per Iso Profit. The contribution margin pass on be $20,600.
Q2. a) Optimum unifyes if Machine hour increased to 1500.
b) Maximum tot up to be paid for increase in capacity.
a) Optimum mix of chairs to maximize contribution margin with increased Machine hour.
Maximize: 35 x Applewood +50 x Bentwood
Note: Contribution Margin for Applewood $35 = $110 - $85
Contribution Margin for Bentwood $50 = $110 - $70
Constraints:
1) Machine Hour: 2 x Applewood + 3 x Bentwood <= 1,500
2) Assembly Labour: 3 x Applewood + 2 x Bentwood <= 1,400
3) Material:1 x Applewood + 0 x Bentwood <= 400
4) Existing order:0 x Applewood + 1 x Bentwood => 50
Results: to maximize contribution margin the company has to produce 240 Applewood model (down from 360) and 340 Bentwood model (up from 160). The contribution margin will be $25,400.
b) Maximum amount to be paid for increase in capacity.
* The maximum amount Antique Company would the likes of to pay for machine hour capacity increase is $4,800 ($25,400 - $20,600) by subtracting two contribution margins.
Q3. Optimal product mix without analogue programming (assuming no labour assembly hour constraints).
retort:
Maximize: 35 x Applewood +50 x Bentwood
Note: Contribution Margin for Applewood $35 = $110 - $85
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