Dwyran Ltd. also manufactures 3 components Alpha, Bravo and Charlie, on its new machine which has 60,000 hours available, with the 3 components being used to produce Delta which is a relatively new product and Dwyran Ltd. are trying to grow their market share.
Dwyran Ltd. has orders for 5,000 units of each, from relatively established customers and Ruth is determined not to let these customers down. Other producers of the components have been sourced and Dwyran Ltd. are satisfied with the quality of these replacements and confident that they can buy them in if necessary.
The following information has been produced:
Each unit takes the following machine hours to make one unit of each component:
Alpha: 3 hours Bravo: 5 hours Charlie: 6 hours
The variable cost per unit of component is:
Alpha: £40 Bravo: £60 Charlie: £50
The buy in purchase cost of each component is:
Alpha: £44 Bravo: £66 Charlie: £65
In order to maximise their profits how many units of each component should the company produce or buy in?