The logistics/operations manager of a mail order house purchases two products for resale: King Beds (K)and Queen Beds (Q).Each King Bed costs $500 and requires 100 cubic feet of storage space,and each Queen Bed costs $300 and requires 90 cubic feet of storage space.The manager has $75,000 to invest in beds this week,and her warehouse has 18,000 cubic feet available for storage.Profit for each King Bed is $300,and for each Queen Bed is $150.For the purchase combination 0 King Beds and 200 Queen Beds,which resource is "slack" (not fully used)?
A)Investment money (only)
B)Storage space (only)
C)Both investment money and storage space
D)Neither investment money nor storage space
E)Cannot be determined exactly

Question

Quizplus · Accepted Answer

The purchase of 200 Queen Beds costs $60,000 (200 x $300), leaving $15,000 of the $75,000 budget unused. The storage space used is 18,000 cubic feet (200 x 90), fully utilizing the available space. Thus, investment money is the slack resource.

The Logistics/operations Manager of a Mail Order House Purchases Two