Question

Photon Technologies, Inc., a manufacturer of batteries for mobile phones, signed a contract with a large electronics manufacturer to produce three models of lithium-ion battery packs for a new line of phones. The contract calls for the following: Battery Pack Production Quantity PT-100 200,000 PT-200 100,000 PT-300 150,000 Photon Technologies can manufacture the battery packs at manufacturing plants located in the Philippines and Mexico. The unit cost of the battery packs differs at the two plants because of differences in production equipment and wage rates. The unit costs for each battery pack at each manufacturing plant are as follows: Plant Product Philippines Mexico PT-100 $0.95 $0.98 PT-200 $0.98 $1.06 PT-300 $1.34 $1.15 The PT-100 and PT-200 battery packs are produced using similar production equipment available at both plants. However, each plant has a limited capacity for the total number of PT-100 and PT-200 battery packs produced. The combined PT-100 and PT-200 production capacities are 175,000 units at the Philippines plant and 160,000 units at the Mexico plant. The PT-300 production capacities are 75,000 units at the Philippines plant and 100,000 units at the Mexico plant. The cost of shipping from the Philippines plant is $0.18 per unit, and the cost of shipping from the Mexico plant is $0.10 per unit.

Answer 1

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