ACCA PM · Chapter 6 · Question 1 of 10
Tau Co makes three products. Labour is limited to 12,000 hours next period. Product X: contribution $24 per unit, 3 labour hours per unit, maximum demand 2,000 units Product Y: contribution $30 per unit, 5 labour hours per unit, maximum demand 1,500 units Product Z: contribution $21 per unit, 2 labour hours per unit, maximum demand 1,000 units In what order should the products be ranked to maximise contribution?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Z, X, Y
Explanation
Contribution per labour hour: X = $24 / 3 = $8.00; Y = $30 / 5 = $6.00; Z = $21 / 2 = $10.50. With labour as the limiting factor, products are ranked by contribution per hour: Z, X, then Y. Ranking by contribution per unit would wrongly put Y first.
More Limiting factors and linear programming MCQs
- Q3Tau Co makes three products. Labour is limited to 12,000 hours next period. Product X: contribution $24 per unit, 3 labour hours per unit…
- Q4Omega Co makes products X and Y. Contribution is $40 per unit of X and $50 per unit of Y. Constraints are: Labour: 2x + 4y <= 4,000 hours…
- Q5Omega Co makes products X and Y. Contribution is $40 per unit of X and $50 per unit of Y. Constraints are: Labour: 2x + 4y <= 4,000 hours…
- Q6In linear programming, what does the shadow price of a scarce resource represent?
- Q7In the optimal solution to a linear programming problem, machine hours are not fully used. Which of the following is true of the…