Optimal Production Units; You have 1,600kg of Material Available. The first product you will produce is the product that has higher contribution per limiting factor rate. Therefore Product Y will be the 1st product we will produce, then Z & X. Okay so we have 1,600 kg material, to produce Product Y in full we need 480kg, we have 1,600 kg available, therefore we can produce all 600 required units of Product Y. Now we have left 1,120 kg of material available. To produce product Z we need 720kg, we have that therefore we can produce product Z in full aswell, Now we are left with 400kg of available material. To produce Product X in full we need 800kg of material, however we only have 400kg therefore we can only produce half of product X (200units).

Maximum Profit;

Product Y - 600 produced units x £1.60 = £960 Product Z - 400 produced units x £2.70 = £1,080 Product X - 200 produced units x £2.50 = £500

P.S. You are probably wondering why we are using Contribution Per Unit £ cost when working out the profit rather than Contribution Per Limited Factor £ cost, it's because the contribution we will receive in regards of profit is measured by Contribution Per Unit cost. Contribution Per Limited Factor cost is only used when we have limited availability of material or labour to see which product is most beneficial in producing in respect of material / labour shortage.

## Answers

7Registered7RegisteredCould you help me with the maximum profit? (b)

7Registered7Registered264MAATNorvydas Valavicius.