Concept explainers
Chemco produces three products: 1, 2, and 3. Each
pound of raw material costs $25. It undergoes processing
and yields 3 oz of product 1 and 1 oz of product 2. It costs
$1 and takes 2 hours of labor to process each pound of raw
material. Each ounce of product 1 can be used in one of
three ways.
It can be sold for $10/oz.
It can be processed into 1 oz of product 2. This requires 2 hours of labor and costs $1.
It can be processed into 1 oz of product 3. This requires 3 hours of labor and costs $2.
Each ounce of product 2 can be used in one of two ways.
It can be sold for $20/oz.
It can be processed into 1 oz of product 3. This requires 1 hour of labor and costs $6.
Product 3 is sold for $30/oz. The maximum number of
ounces of each product that can be sold is given in Table 23.
A maximum of 25,000 hours of labor are available.
Determine how Chemco can maximize profit.
TAB LE 23
Product Oz
1 5,000
2 5,000
3 3,000
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