The management of Bachor Corporation has provided the following data concerning its two products: The constrained resource is a particular machine that is available for 9,800 minutes each month.
-Up to how much should the company be willing to pay to obtain enough of the constrained resource to satisfy demand for the two existing products?
A)$54.00 per minute
B)$6.40 per minute
C)$10.80 per minute
D)$57.60 per minute

Question

The management of Bachor Corporation has provided the following data concerning its two products:  The constrained resource is a particular machine that is available for 9,800 minutes each month.
-Up to how much should the company be willing to pay to obtain enough of the constrained resource to satisfy demand for the two existing products?
A)$54.00 per minute 
B)$6.40 per minute 
C)$10.80 per minute 
D)$57.60 per minute

Quizplus · Accepted Answer

The shadow price for the constrained resource is $6.40 per minute. Therefore, the company should be willing to pay up to $6.40 per minute to obtain enough of the resource to satisfy demand for the two products. Paying more than this amount would result in the company incurring losses.

The Management of Bachor Corporation Has Provided the Following Data