JasNav Design Inc. sells three types of heat sensitive products: Cool, Warm and Hot. Estimated sales demand, unit selling prices and production requirements are as follows: Cool Warm Hot Estimated sales demand 600 500 400 Unit sales price $16 $18 $14 Production requirements per unit: Material Y9 (in kilograms) 8 5 2 Heat sensitive paint (in litres) 6 12 18 The company has existing stocks of 300 units of Cool and 200 units of Hot, but is adopting just-in-time inventory management and expects to reduce inventory to zero by the end of next year. All three products use the same direct materials. In the next year, the available supply of materials will be restricted to 5,000 kilograms of material Y9 and 12,000 litres of heat sensitive paint. Material Y9 costs $0.95 per kilogram and the heat sensitive paint costs $0.50 per litre. All other costs are fixed. Required - Calculate the number of units of each product JasNav Design Inc. should produce next year to maximize company profits.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

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JasNav Design Inc. sells three types of heat sensitive products: Cool, Warm and Hot. Estimated sales demand, unit selling prices and production requirements are as follows:

		Cool	Warm	Hot
Estimated sales demand		600	500	400
Unit sales price		$16	$18	$14
Production requirements per unit:
	Material Y9 (in kilograms)	8	5	2
	Heat sensitive paint (in litres)	6	12	18

The company has existing stocks of 300 units of Cool and 200 units of Hot, but is adopting just-in-time inventory management and expects to reduce inventory to zero by the end of next year.

All three products use the same direct materials. In the next year, the available supply of materials will be restricted to 5,000 kilograms of material Y9 and 12,000 litres of heat sensitive paint. Material Y9 costs $0.95 per kilogram and the heat sensitive paint costs $0.50 per litre. All other costs are fixed.

Required -

Calculate the number of units of each product JasNav Design Inc. should produce next year to maximize company profits.

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