help with ecr limiting factors please.....??

Saleena

Hi there

I have the following question, which I would really appreciate some help with please?

A Company produces three products, all of which require Material X. Material X is in short supply. A unit of Product A requires 2 kilos of Material X and generates a contribution of £20. A unit of Product B requires 3 kilos of Material X and generates a contribution of £24. A unit of Product C requires 1.5 kilos of Material X and generates a contribution of £18.

a) To get the best value from the limited supplies of Material X, how should products A, B and C be ranked in the production plan?

b) In a particular period, the demand for Products A, B and C are estimated as 3,000, 4,000 an 5,000 units respectively. Supplies of Material X are limited to 15,000 kilos for the period. How many units of Product B will we plan to produce?

Many thanks in advance for any responses/help/advice people can provide

Saleena xx

Andypandy

HI Selena, will try & lend a hand with this;
Product A : Contribution per kg = £10 Ranked 2
Product B : Contribution per kg = £8 Ranked 3
Product C: Contribution per kg = £12. Ranked 1.
7500kgs on product c, 6000kg on product a, leaves 1500 kg available for product b (ie 500 units). Hope this helps.

Saleena

thanks andy but could you show/tell me how you worked out the second section please?

thanks x

Andypandy

We make sure the highest ranked products are catered for first, so because demand for C is 5000 units we'd commit 7500kgs of x to it ( 1.5 x 5000). Then we'd commit 6000kgs of X to product A because demand is 3000 units @ 2kg per unit. That leaves us 1500kg s of X left, & we know that product B uses 3kg per unit so we can only produce 500 units. Sorry about the rubbish expanations - fried brain cells after the exams!

Saleena

Thanks Andy

That's brill. Explanation was spot on ) x

Andypandy

Any time!:001_smile: