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LMN Ltd manufactures three products L, M and N. The company which supplies the two...

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Accounting

LMN Ltd manufactures three products L, M and N. The company which supplies the two raw materials which are used in all three products has informed LMN that their employees are refusing to work overtime. This means that supply of the materials is limited to the following quantities for the next period: Material A 1,030 kg Material B 1,220 kg No other source of supply can be found for the next period. Information relating to the three products manufactured by LMN Ltd is as follows: L M N Quantity of material used per unit manufactured: Material A (kg) 2 1 4 Material B (kg) 5 3 7 Maximum sales demand (units) 120 160 110 Contribution per unit sold 15 12 17.50 Owing to the perishable nature of the products, no finished goods are held. Requirements (a) Recommend a production mix which will maximise the profits of LMN Ltd for the forthcoming period. (b) LMN Ltd has a valued customer to whom they wish to guarantee the supply of 50 units of each product next period. Would this alter your recommended production plan?

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