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Linear Programme

(1) Dauntless Ltd aims to maximize profits from products X and Y given selling prices and variable costs per unit. Material A will be limited to 24,000 litres in the first 3 months. (2) In the second 3 months, both Material A and B will be limited to 24,000 litres each. The management accountant has determined the optimal plan involves a combination of products X and Y using linear programming. (3) The task is to determine the optimal production plans and total contributions for products X and Y in units for the first and second 3 month periods next year.

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Ahmed Raza
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70 views3 pages

Linear Programme

(1) Dauntless Ltd aims to maximize profits from products X and Y given selling prices and variable costs per unit. Material A will be limited to 24,000 litres in the first 3 months. (2) In the second 3 months, both Material A and B will be limited to 24,000 litres each. The management accountant has determined the optimal plan involves a combination of products X and Y using linear programming. (3) The task is to determine the optimal production plans and total contributions for products X and Y in units for the first and second 3 month periods next year.

Uploaded by

Ahmed Raza
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Chapter Linear Programming

Linear Programming
1. Dauntless Ltd aims to maximise its profits from the two products (X and Y) which it
manufactures and sells. The selling prices per unit for products X and Y are £220 and
£206 respectively. At these prices the company can sell all that it can produce. The
following product cost data is available:

Product X Product Y
£/unit £/unit
Material A (£6 per litre) 30 36
Material B (£7·50 per litre) 45 30
Other variable costs 55 44
Total variable cost 130 110

In the first three months of next year the supply of material A will be limited to 24,000
litres. However in the second three month period both material A and material B will be
in short supply and each will be limited to 24,000 litres. The company holds no stocks.

Required:
(a) Determine the optimal production plan in units for the first three months of next
year and the resultant total contribution.

The company’s management accountant has already carried out some preliminary
calculations relating to the second three month period. Using linear programming, she has
determined that the optimal production plan for that quarter involves a combination of
product X and product Y.

Required:
(b) Determine the optimal production plan in units for the second three month period
of next year and the resultant total contribution.
Chapter Linear Programming

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Chapter Linear Programming

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