Rosehill Co. manufactures two types of toilet paper: Ultra-strong and Ultra-soft. Because of a recent shortage of chlorine-based bleach, a key ingredient needed for the two products, the company has to decide the optimal amount of each product to produce. Information related to the two products that use chlorine-based bleach are shown below:
|
Ultra-strong |
Ultra-soft |
Selling price per case |
$100 |
$96 |
Variable cost per case |
$40 |
$44 |
Chlorine-based bleach required per case (in liters) |
10 |
8 |
Maximum monthly demand (in cases) |
500 |
700 |
Assume that Rosehill Co. only has 7,200 liters of Chlorine-based bleach available next month. To maximize the company’s contribution margin next month, how many cases of Ultra-strong and how many cases of Ultra-soft the company should produce?
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