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Project LPP

1) The Regular Mix costs $1.65/lb, Deluxe $2/lb, and Holiday $2.25/lb based on nut costs and profit margins. 2) The optimal mix maximizes profits by fulfilling orders from most to least profitable. 3) Additional nuts could increase profits by producing more of the most profitable mixes. 4) Purchasing extra almonds would only increase profits if used in the most profitable way. 5) If orders cannot be fully filled, profits may increase by prioritizing the most profitable orders.

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156 views2 pages

Project LPP

1) The Regular Mix costs $1.65/lb, Deluxe $2/lb, and Holiday $2.25/lb based on nut costs and profit margins. 2) The optimal mix maximizes profits by fulfilling orders from most to least profitable. 3) Additional nuts could increase profits by producing more of the most profitable mixes. 4) Purchasing extra almonds would only increase profits if used in the most profitable way. 5) If orders cannot be fully filled, profits may increase by prioritizing the most profitable orders.

Uploaded by

Dupal Jit Das
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Case Problem 1 PRODUCT MIX

TJ, Inc.'s makes three nut mixes for sale to grocery chains located in the Southeast. The three mixes, referred to as
percentages of five types of nuts. In preparation for the fall season, TJ, Inc?'s just purchased the following shipment

Shipment
Type of Cost per Shipment Type of Orders
Amount
Nut (S) Mix (pounds)
(pounds)
Almond 6000 7500 Regular 10,000
Brazil 7500 7125 Deluxe 3,000
Filbert 7500 6750 Holiday 5,000
Pecan 6000 7200
Walnut 7500 7875

The Regular Mix consists of 15% almonds, 25% Brazil nuts, 25% filberts, 10% pecans, and 25% walnuts. The Deluxe
almonds, 15% Brazil nuts, 15% filberts, 25% pecans, and 20% walnuts.
An accountant at TJ, Inc. analyzed the cost of packaging materials, sales price per pound, and so forth, and determi
Deluxe Mix, and $2.25 for the Holiday Mix. These figures do not include the cost of specific types of nuts in the diffe
demand is running high, it is expected that TJ, Inc. will receive many more orders than can be satisfied.
TJ, Inc. is committed to using the available nuts to maximize profit over the fall season; nuts not used will be given t
the orders already received must be satisfied.

Managerial Report

Perform an analysis of the TJ, Inc's product-mix problem, and prepare a report for the president of TJ, Inc. that sum
to include information and analysis on the following:

1. The cost per pound of the nuts included in the Regular, Deluxe, and Holiday mixes
2. The optimal product mix and the total profit contribution
3. Recommendations regarding how the total profit contribution can be increased if additional quantities of nuts ca
4. A recommendation as to whether IJ, Inc. should purchase an additional 1000 pounds of almonds for $1000 from
5. Recommendations on how profit contribution could be increased (if at all) if TJ, Inc. does not satisty all existing o
t. The three mixes, referred to as the Regular Mix, the Deluxe Mix, and the Holiday Mix, are made by mixing different
purchased the following shipments of nuts at the prices shown:

ns, and 25% walnuts. The Deluxe Mix consists of 20% of each type of nut, and the Holiday Mix consists of 25%

pound, and so forth, and determined that the profit contribution per pound is $1.65 for the Regular Mix, $2.00 for the
of specific types of nuts in the different mixes because that cost can vary greatly in the commodity markets. Because
than can be satisfied.
ason; nuts not used will be given to a local charity. Even if it is not profitable to do so, TJ, Inc.'s president indicated that

the president of TJ, Inc. that summarizes your findings. Be sure

xes

d if additional quantities of nuts can be purchased


ounds of almonds for $1000 from a supplier who overbought
Inc. does not satisty all existing orders

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