Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Statistics and Probability Expert

To advance the linear programming model that maximizes the net profit.

Roundtree Cannery is a medium sized company which produces as well as distributes a variety of fruit and vegetable products under private brands in the north-central states.  On Monday, September 14, 2009, Mr. Jackson, Vice-President of Operations, asked Ms. Adams, Controller, Mr. Owens, Vice President of Marketing, and Ms. Brandon, Vice President of Production, to see with him to discuss the amount of cranberry products to pack this season. The cranberry crop, which had been purchased at planting was beginning to arrive at the plant as well as packing operations would have to be started by the following Monday. A total of 3,000,000 pounds had been purchased. Assume no waste.

At the meeting each person was given the Produce Inspection Report that contained the latest estimate of the quality of incoming cranberries.  Interpretation to this report about 20% of the crop will be Grade a quality and the residual portion will be Grade B.  Mr. Jackson asked Mr. Owens about the appraised demand for cranberry products for the coming year.  Mr. Owens passed around the latest demand forecast (Exhibit 1-- Demand Forecasts: case selling price and number of cases demanded).  While the forecast designated that they could sell all of the whole canned cranberries they could produce the expected demand for cranberry juice as well as jellied cranberry was limited.  He prompted the group that the selling prices had been set in light of the long-term marketing strategy of the company as well as that the potential sales had been forecasted at these prices.

Exhibit 1

Demand Forecasts

Product

Selling Price per Case

Demand Forecast (Cases)

24 packages/case whole cranberries

$4.00

800,000

24 cans/case choice peach halves

$5.40

10,000

24 cans/case peach nectar

$4.60

5,000

24 bottles/case cranberry juice

$4.50

50,000

24 can/case cooking apples

$4.90

15,000

24 cans/case jelled cranberry sauce

$3.80

80,000

Ms. Adams, after observing at the demand estimates said that it appeared like the company must do quite well on the cranberry crop this year. With the fresh accounting system that had been set up she had been able to find out the contribution for each product and according to her analysis, the incremental contribution on whole cranberries was greater than the incremental contribution on any other cranberry product. In May after Roundtree had hired contracts agreeing to purchase the grower=s production at an average delivered price of 6 cents per pound, Ms. Adams had find outd the cranberry products= contributions shown in Exhibit 2 (Product Item Profitability by Case). Exhibit 2 was dispersed to the officers at the meeting.

Exhibit 2

Product Item Profitability/Case

Product

Whole cranberries

Peach halves

Peach nectar

Cranberry juice

Cooking apples

Cranberry jellied

 

Selling Price

$4.00

$5.40

$4.60

$4.50

$4.90

$3.80

Variable costs

Direct Labor

$1.18

$1.40

$1.27

$1.43

$.70

$.54

Variable Overhead

$.24

$.32

$.23

$.36

$.22

$.26

Variable selling cost

$.40

$30

$.40

$.85

$.28

$.38

Packaging Material

$.70

$.56

$.60

$.65

$.70

$.77

Fruit

$1.08

$1.80

$1.70

$1.20

$.90

$1.50

Total Variable Costs

$3.60

$4.38

$4.20

$4.38

$2.80

$3.45

Contribution

$.40

$1.02

$.40

$.12

$1.10

$.35

Less allocated overhead

$.28

$.70

$.52

$.21

$.75

$.23

Net profit

$.12

$.32

($.12)

($.09)

$.35

$.12

Product usage in terms of pounds per case is shown in Exhibit 3.

Exhibit 3. Product Usage

Product

Pounds per Case

Whole cranberries

18

peach halves

18

Peach nectar

17

Cranberry juice

20

Cooking apples

27

Jellied cranberry sauce

25

Ms. Brandon transported to their attention that although there was ample production capacity, it was incredible to produce all whole cranberries since too small a portion of the cranberry crop was AA@ quality.  Roundtree utilized a numerical scale to record the quality of both raw products and prepared products.  This measure ran from zero to ten the higher number representing better quality.  As-per to this scale AA@ cranberries average nine points per pound and AB@ cranberries average five points per pound.  Ms. Brandon renowned that the minimum average input quality was eight points per pound for whole cranberries and six points per pound for juice.  Jellied cranberries could be made entirely from AB@ cranberries.  This meant which the whole cranberry production was limited to 800,000 pounds.

 Mr. Jackson stated that this wasn't a real limitation.  He had remained recently solicited to purchase 80,000 pounds of Grade a cranberries at $.085 per pound and at that time had turned down the offer. He felt but that the cranberries were still available.

a. Develop a model that can be utilized to maximize contribution (total sales less variable costs) with only the 3,000,000 pounds of cranberries.

b. Deliberate whether the additional 80,000 pounds of Grade a cranberries should be purchased. Describe your decision.

Statistics and Probability, Statistics

  • Category:- Statistics and Probability
  • Reference No.:- M921250

Have any Question? 


Related Questions in Statistics and Probability

You are at a magic show the magician has a coin and you as

You are at a magic show. The magician has a coin and you, as a member of the audience, do not know whether the coin has heads on both sides or heads on one side and tails on the other. The null hypothesis is that the coi ...

A new process is proposed for the manufacture of steel

A new process is proposed for the manufacture of steel shafts, Data are 6.38, 6.40, 6.41, 6.38, 6.39, 6.36 and 6.37. Target is 6.40. a. What is the expected loss? b. What is the standard deviation?

A laboratory in california is interested in finding the

A laboratory in California is interested in finding the mean chloride level for a healthy resident in the state. A random sample of 50 healthy residents has a mean chloride level of 100 mEq/L. If it is known that the chl ...

In a survey of 635 males ages 18-64399 say they have gone

In a survey of 635 males ages 18-64,399 say they have gone to the dentist in the past year.Construct 90% and 95% confidence intervals for the population proportion. Interpret the results and compare the widths of the con ...

Two population meansa tomato farmer with a very large farm

Two Population Means A tomato farmer with a very large farm of approximately 2200 acres had heard about a new type of rather expensive fertilizer which would supposedly significantly increase his production. The frugal f ...

Assignmentthe production department of the newspaper wants

Assignment The production department of the newspaper wants to ensure that the mean blackness of the print for all newspapers is at least 0.97 on a standard scale in which the target value is 1.0. A random sample of 50 n ...

If 2 of the calls received by schools switchboard are wrong

If 2% of the calls received by schools switchboard are wrong numbers. Find the probability that among 210 calls received by schools switchboard, 4 will be wrong numbers. a). Determine in this case whether the conditions ...

Uncertain scenario-maximizing the meanthe potential

Uncertain Scenario-Maximizing the Mean The potential revenues of all projects are in fact uncertain. The company determines that the revenue for project 1 is following a uniform distribution ranging from $1,200,000 to $2 ...

A bakery was taken to court for selling loaves of bread

A bakery was taken to court for selling loaves of bread that were underweight. These loaveswere advertised as weighing 24 ounces. In its defense, the bakery claimed that the advertisedweight was meant to imply not that e ...

1 why do researchers care how much variability exists in a

1. Why do researchers care how much variability exists in a set of data? 2. Distinguish between descriptive and inferential statistics. 3. Conceptually, what does the variance tell us about a set of data?

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen