Goss Inc. has the capability to manufacture five products, and has 1,500 labor hours available each week for production. Each unit manufactured requires a
stamp of approval by an inspector, who works 40 hours per week and can inspect a unit in about a minute. Per-unit information about the five products is as follows:
Selling Price DM Cost Production Time Demand
Product A Selling Price$50 DM Cost$10 Production Time 1 hour Demand 350
Product B Selling Price$35 DM Cost$15 Production Time 1/2 hour Demand 350
Product C Selling Price$70 DM Cost $20 Production Time 2 hours Demand 500
Product D Selling Price $100 DM Cost $30 Production Time 3 1/2 hours Demand 250
Product E Selling Price$20 DM Cost $5 Production Time 1/4 hour Demand 300
Currently, Goss only produces its two highest throughput margin products, manufacturing 312 units of Product C and 250 units of Product D each week. Goss cannot change its production capacity, but it could hire an additional inspector if needed for $500 per week.
Determine whether Goss is using its production capacity wisely, and if that capacity could or should be increased. Determine the optimum product mix given current production constraints, and given production constraints if changes are made.
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