## (solution) Dan Dodgy has now decided to branch out into manufacturing

Dan Dodgy has now decided to branch out into manufacturing surfboards. His model range is currently somewhat limited in that he only manufactures one type of board, which he calls the Dodgy. He is now thinking about adding a second board to the range, the Super Dodgy; he is really excited because he thinks he will now be able to become wealthy and retire before he turns fifty. His problem is that he still has limited production facilities and needs to know how many of each of the boards to produce to maximise his profit. He can make \$375 profit from a Dodgy and \$732 profit from a Super Dodgy, so is tempted to only produce Super Dodgies. However, as the Super Dodgy is more expensive for buyers than the Dodgy, Dan thinks he will only be sell a total of 30 Super Dodgies, but, according to his contract with an international surfboard company, must produce at least 125 Dodgies in a year. A Dodgy takes 22 hours of labour to produce and a Super Dodgy 30. The maximum number of hours available for manufacturing is 3600 (i.e., 2 labourers at 37.5 hours per week for 48 weeks per year). The material costs for a Dodgy are \$275 per unit, and the Super Dodgy \$325. The total available to spend on materials is \$45,000. Your job is to advise Dan how many of each of the models to manufacture in order to maximise his profit.

Part A - Spreadsheet (25 marks) You will need to create a excel spreadsheet for Craig with the following functionality: a. Calculate the optimal production levels of both models given the scenario above. b. Calculate the optimal production levels of both models if Craig decides he must make a minimum of 150 Dodgies, and thinks he can sell 45 Super Dodgies by adding an additional member of staff (i.e., an additional 1800 hours of labour). NB: Craig should be able to see the impacts of both scenarios at a glance.

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This question was answered on: Jan 30, 2021

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