Question

The company can manufacture either 3 couches per machine hour or 2 ​bed(s) per machine hour. The​ company's production capacity is 9,300 machine hours per month. To maximize​ profits, what product and how many units should the company produce in a​ month?

Answer 1

Based on the available information, the company should produce 27,900 units of couches in a month. This decision may be different if we have the product profitability information in terms of contribution of each product.

Step-by-step explanation:

Couches Bed(s)

Production per machine hour (unit) 3 2

Available Capacity (Machine hour per month) 9,300 9,300

Total possible production (unit) (9,300 x 3)-Couches 27,900

Total possible production (unit) (9,300 x 2)-Bed 18,600

Based on the available information, the company should produce 27,900 units of couches since it is the production activities that produces a higher number of units in a month compared to the production of beds which can only yield 18,600 units considering the available production capacity of 9,300 machine hours per month.

The decision may be different if we have the product profitability information in terms of contribution of each product.