Problem
PRODUCT MIX PRIORITIZATION WITH CONSTRAINTS: Yuba Machine Company processes all of its products through a lathe machine. The lathe is only available for 60 hours per week. The selling price, variable costs, and lathe time requirements for Yuba Machine Company's three products are as follows:
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Product D
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Product E
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Product F
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Selling price per unit
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$80.00
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$60.00
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$100.00
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Variable cost per unit
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$45.00
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$35.00
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$80.00
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Minutes of lathe time required per unit
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10
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20
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5
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In what order should Yuba Machine Company emphasize its products to maximize its contribution margin? (Rank the products in order from most profitable to least profitable)
Assume that the maximum customer demand for each product is 300 units. How many of each product should be produced and sold to maximize profits given the constraint in lathe hours?
What is the total contribution margin if Yuba produces the quantities calculated in item "b"?