XY Ltd. is manufacturing three household products A, B and C, and selling them in a competitive market. Details of current demand, selling price and cost structure are given below:
The company is frequently affected by acute scarcity of raw material and high labour turnover. During the next period, it is expected to have one of the following situations:
(a) Raw materials available will be only 12,100 kgs.
(b) Direct labour-hours available will be only 5,000 hours.
(c) It may be possible to increase sales of any one product by 25 per cent without any additional fixed costs but by spending `20,000 on advertisement.
There will be no shortage of materials or labour. Suggest the best production plan in each case and the resultant profit that the company would earn according to your suggestion.
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