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Delaware Valley Hula Hoops produces four products. Data concerning the selling prices and unit cost of the four products appears below:
Selling Price
$5
$4
$9
$7
A
B
C
D
Variable Costs
4
3
6
5
Machine time
4 min.
5 min.
6 min.
3 min.
Demand per week
600 units
1,000 units
200 units
The fixed costs incurred in the factory are $1,000 per year. Demand for the three products exceeds the company's productive capacity. The machine time is the constraint, with only 4,800 minutes of machine time available each week.
Required: Determine the production level of A, B, C and D that will maximize profits.
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