[The following information applies to the questions displayed below.] JFI Foods

Question

[The following information applies to the questions displayed below.] JFI Foods produces processed foods. Its basic ingredient is a feedstock that is mixed with other ingredients to produce the final packaged product. JFI purchases the feedstock from two suppliers, Rex Materials and Red Oak Chemicals. The quality of the final product depends directly on the quality of the feedstock. If the feedstock is not correct, JFI has to dispose of the entire batch. All feedstock in this business is occasionally "bad," so JFI measures what it calls the "yield," which is measured as, Yield-Good output ÷ input where the output and inputs are both measured in tons. As a benchmark, JFI expects to get 21 tons of good output for every 30 tons of feedstock purchased for a yield of 70 percent (-21 tons of output ÷ 30 tons of feedstock Data on the two suppliers for the past year follow Red Oak Chemicals Rex Materials Total inputs purchased (tons) Good output (tons) Average price (per ton) 2,380 1,678 Total 3,860 2,951 1,480 1,273 $ 245 $205 $ 220

Explanation / Answer

Raw Materials Red Oak Chemicals Total Total Purchased 1480 2380 3860 Good output 1273 1678 2951 Yield (Good output / Purchased) 86.01 70.50 76.45 Average price (per ton) 245 205 220 Effective price per ton 284.85 144.53 168.19 Maximum Price per ton = 284.85 * 70% 199.40 *Effective price per ton = Average Price (per ton) / Yield * 100 *Yield = Good output / Total Purchased * 100

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