Chapter 20, Problem 3CE

Patz Company produces two types of machine parts: Part A and Part B, with unit contribution margins of $300 and $600, respectively. Assume initially that Patz can sell all that is produced of either component. Part A requires two hours of assembly, and B requires five hours of assembly. The firm has 300 assembly hours per week.

Required:

1. 1. Express the objective of maximizing the total contribution margin subject to the assembly-hour constraint.
2. 2. Identify the optimal amount that should be produced of each machine part and the total contribution margin associated with this mix.
3. 3. What if market conditions are such that Patz can sell at most 75 units of Part A and 60 units of Part B? Express the objective function with its associated constraints for this case and identify the optimal mix and its associated total contribution margin.