Eagle Furniture makes wooden rustic furniture. The major bottleneck in production is the time in...
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Eagle Furniture makes wooden rustic furniture. The major bottleneck in production is the time in the wood cutting shop. The demand for the products exceeds the current capacity. There are two major product lines: chests and nightstands. The company has to decide which product line should get priority in production. Information about the product lines is provided below.
Chest
Nightstand
Selling price per unit
$1400
$750
Variable cost per unit
$800
$490
Required time in wood shop to produce 1 unit
0.5 hours
0.75 hours
Required time at polishing shop to produce 1 unit
1.2 hours
0.3 hours
Monthly production hours available at the wood cutting station is 400 hours. Monthly production hours available at the polishing station is 440 hours. Use linear programming and Excel Solver to determine the optimal product mix. Answer the questions below accordingly.
(a) How many chests should be produced per month to maximize the total contribution margin?
(b) How many nightstands should be produced per month to maximize the total contribution margin?
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