What is the optimal production schedule for slavin

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Reference no: EM131977043

Problem

Slavin Corporation manufactures two products, Alpha and Delta. Each product requires time on a single machine. The machine has a monthly capacity of 500 hours. Total market demand for the two products is limited to 150 units (each) monthly. Slavin is currently producing 110 Alphas and 110 Deltas each month. Cost and machine-usage data for the two products are shown in the following table, which Slavin managers use for planning purposes:

	Alpha		Delta		Total
Price	$	120	$	150
Less variable costs per unit
Material		20		35
Labor		26		37
Overhead		14		14
Contribution margin per unit	$	60	$	64
Fixed costs
Manufacturing					$	8,000
Marketing and administrative					$	5,000
					$	13,000
Machine hours per unit		2.0		2.5
Machine hours used						495
Machine hours available						500
Quantity produced		110		110
Maximum demand		150		150
Profit	$	640

Required:

a. What is the optimal production schedule for Slavin? In other words, how many Alphas and Deltas should the company produce each month to maximize monthly profit?

b. If Slavin produces at the level found in requirement (a), how much will monthly profit increase over the current production schedule?

Reference no: EM131977043

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