Brunel manufactures plastic-covered steel fencing in two qualities, standard and heavy gauge. Both products pass through the same processes, involving steel-forming and plastic bonding.
Standard gauge fencing sells at $18 a roll and heavy gauge fencing at $24 a roll. Variable costs per roll are $16 and $21 respectively. There is an unlimited market for the standard gauge, but demand for the heavy gauge is limited to 1,300 rolls a year. Factory operations are limited to 2,400 hours a year in each of the two production processes.
Processing hours per roll
|
Gauge
|
Steel-forming
|
Plastic-bonding
|
|
Standard
|
0.6
|
0.4
|
|
Heavy
|
0.8
|
1.2
|
What is the production mix which will maximise total contribution and what would be the total contribution?