Accounting Linear Programming Case Study Homework Help
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Ivory Delights manufactures 3 main products: Belly Beans, Darties and Nubes and supplies to supermarket chains and distributors. Although the company does make other confectionery treats these are seasonal and change yearly. The raw material ingredients that the three products use are all the same, it’s the process of mixing and cooking that determine how the product will turn out.
Belly Beans are small lollies which come in 5 flavours and every 110g pack contains 5 of each flavour. Ivory Delights packages 20 individual packets into boxes which are then shrink wrapped ready to be supplied to the customer. To produce these lollies 1.5kg of raw material is required, 2 hours of labour and overhead is applied at a rate of 150% of direct labour.
Darties are a similar sized lolly to Belly Beans and come in 7 different flavours and packaged in a small cardboard box weighing 130g per box. Darties boxes holds 15 packages of these boxes. To produce this lolly requires 2 kg of raw material, 2.5 hours of direct labour and overhead is applied at 150% of direct labour.
Nubes are sugar coated lollies which are soft and chewy to eat and is Ivory Delights’ biggest seller. Ivory Delights has kept to traditional flavours and will once a year bring in a limited edition flavour for a set period. Nubes require 3 kg of raw material, 3 hours of direct labour with overhead applied at 150%. A box contains 10 Nubes packages.
Each of these 3 products goes through the same manufacturing process which consists of mixing, cooking and packaging. Belly Beans are sold for $1.60 per pack, Darties for $1.70 and Nubes at $2.00 per pack.
|Belly Beans||$ 1.60||$ 0.30||$ 0.20||$ 0.30|
|Darties||$ 1.70||$ 0.50||$ 0.10||$ 0.15|
|Nubes||$ 2.00||$ 0.40||$ 0.27||$ 0.41|
1. Using Solver, derive the optimal solution for the number of boxes that should be prepared to maximise profit.
2. State the optimal confectionery treat mix and the resulting profit.
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3. Should the product mix suggested by solver be implemented?
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