ody Company manufacture a wide range of products for the body, face, hair and home. The Bath and Body Company claims its products are "inspired by nature" and feature natural ingredients that is ethically-sourced. The most popular products are the range of shower gels and body butters in natural fragrances like “Milk and honey”, “Strawberry” and “Papaya”. The shower gel and body butter use similar raw material and labour to manufacture. The resources required to manufacture one unit of each product is as follow: table
The Bath and Body Company manufacture a wide range of products for the body, face, hair and home. The Bath and Body Company claims its products are "inspired by nature" and feature natural ingredients that is ethically-sourced.
The most popular products are the range of shower gels and body butters in natural fragrances like “Milk and honey”, “Strawberry” and “Papaya”. The shower gel and body butter use similar raw material and labour to manufacture.
The resources required to manufacture one unit of each product is as follow:
table
BODY BUTTER SHOWER GEL
Material 1 4 l 8 l
Material 2 2 l 3 l
Natural Fragrance (variable overheads) 0.5 l 0.5 l
Labour 2 hours 1 hour
The cost of material 1 is R5 per litre and material 2 R3 per litre.
The cost of the natural fragrance is R20 per litre
The cost of labour is R 20 per hour.
Material 1 & 2 is imported from the UK. Due to “lock down “restrictions only 1 500 l of material 1 and 1 000 l of material 2 could be delivered for production in June.
The following was made available for the month of June:
The demand for Body Butter is 200 units.
The demand for Shower Gel is 120 units.
Body Butter is sold for R80 per unit and Shower Gel for R100 per unit.
REQUIRED:
Determine the production mix that will maximise profit in June.
(Show all calculations – contribution, limitations and number of units to be manufactured)
Due to COVID regulations the number of workers in the factory is restricted to 50% of capacity. As a result, the number of labour hours available would be a limitation. This is an example of a labour limitation. If a capacity bottleneck on the number of labour hours available occur, discuss TWO measure that a company could implement to resolve the limitation. (
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