The constraint at Dalbey Corporation is time on a particular machine. The compan

Question

The constraint at Dalbey Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below:

Assume that sufficient time is available on the constrained machine to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of this constrained resource?

The constraint at Dalbey Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below:

Explanation / Answer

$14.30 per minute for KZ.

..... .... .... .... .... ... .... .... .... .... ....KZ.... ........ XB .... .... .... ZP ......
Selling price per unit.... ... .... ..... ...$511.28 .....$376.98 ... ... $142.60
Variable cost per unit .... .... .... ... ..$392.59..... $286.70 .... .. $108.79
Contribution margin per unit .... .....$118.69..... ..$90.28 .... ......$33.81
Amount of the constrained
resource required to produce
one unit ...... ........ ....... ....... ...... ........ ...8.30 ...... ....6.10 ..... ........2.30
Contribution margin per unit of
the constrained resource ...... ...... .......$14.30*...... ...14.80 ...... ......14.70
Ranking ....... ....... ........ ........ ....... ........ ......3 ...... ....... ...1 ....... ...... ....2

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