Production capacity, cost of materials, labour costs, manufacturing time, and other known constraints are provided below:
Production Capability and Constraints (All unit costs are in $ and time in hours)
• Total Machine hours available: Min 39,000 – Max 40,000 hrs.
• The number of basketballs that can be produced: Min 30,000 – Max 60,000
• The number of footballs that can be produced: Min 20,000 – Max 40,000
• Time to manufacture a Basketball: 0.5 hrs.
• Time to manufacture a Football: 0.3 hrs.
• Cost of labour -- 1 machine hour: $6.00
• Cost of material-- 1 Basketball: $2.00
• Cost of material-- 1 Football: $1.25
The company wants to determine the ideal number of basketballs and footballs to manufacture that will maximize the facility’s net profit after taxes.
Be sure to address all relevant points, discuss any assumptions you are making, and highlight the following items in your report:
• A recommendation for the number of basketballs and footballs to manufacture that maximizes net profit after taxes given the existing constraints.
• A discussion of which constraints are binding and the amount of slack or surplus in the remaining constraints.
• A list of recommendations as to what actions the company may take in the future to increase profitability, and how much extra profit the company might expect if the action is taken. Note that these values can be used by the company to determine whether the expected gain in net profit will offset any capital investment required to implement your recommendations.