Steel Works Inc. is a mill that recycles shredded scrap steel into usable products such as...

Steel Works Inc. is a mill that recycles shredded scrap steel into usable products such as alloy for communication equipment, coils for appliances and wire for cable connectors.

With the increase in orders, the manufacturing process bottlenecks at the rolling machine. The company has placed an order for a second machine, but it will not be available for another month.

Below are orders for the upcoming month and current revenue and cost data:

	Alloy	Coils	Wire
Units ordered	1,000	750	600
CM per unit	$140	$45	$75
Units per hour in machine	10	3	30

If the coil rolling machine can be operated for 300 hours in a month, will all orders be fulfilled this month?
If not, what order should the products be made to maximize NOI for the month?
How many machine hours should be allocated to each product to maximize NOI for the month?
How many units of each product should be made to maximize NOI for the month?
What would cause the company to decide NOT to follow the above plan and maximize profits?

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Expert Solution

ekkarill92 answered 1 year ago

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