Hiland’s Appliances laptops, TVs, refrigerators, microwave ovens, and ranges. These products compete for floor space, tie up different amounts of capital, and have different profit margins. The company has also specified minimum percentages of these products it wants to stock (out of the total of all items stocked). The relevant data are listed in the file P04_55.xlsx. Hiland’s wants no more than $750,000 to be tied up in inventory of these products, and it has only 10,000 square feet of floor space for them.
a. Assuming that the value of the company’s inventory is the sum of all profit margins of all items, how many units of each product should the company stock to maximize its value?
b. If the company could obtain an extra 2500 square feet of floor space, how much would it be worth in terms of extra value? Is the value from 5000 extra square feet twice as much as the value from 2500 extra square feet?
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