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A Omani Olive oil merchant imports two Olive oil brands, A and B, from Barazil, then blends and bottles them himself to produce two own label brands, Gahwa and Nakhla. The two Olive oil brands A and B cost OR0.80 and OR0.20 per Litre respectively delivered to his blending and bottling factory. Gahwa consists of 60% Olive oil A and 40% of Olive oil B, whilst Nakhla is 20% of Olive oil A and 80% of Olive oil B. The merchant sells Gahwa at OR2.00 per Litre to shops and Nakhla at OR1.20. The blending, bottling and distribution costs are OR0.50 per Litre for both brands. The Olive oil merchant has agreed to buy at least 24,000 Litres of Olive oil A this year and there is a maximum of only 120,000 Litres of Olive oil B available. The merchant estimates that the maximum sales during the year of Gahwa are 50.000 Litres but that the demand for the Nakhla is unlimited. The Olive oil merchant has only OR60,000 available to finance the purchase of Olive oil A and B this year. How many Litres of Gahwa and Nakhla should the Olive oil merchant produce to maximise this year's profits?

A Omani Olive oil merchant imports two Olive oil brands, A and B, from Barazil, then blends and bottles them himself to produce two own label brands, Gahwa and Nakhla. The two Olive oil brands A and B cost OR0.80 and OR0.20 per Litre respectively delivered to his blending and bottling factory. Gahwa consists of 60% Olive oil A and 40% of Olive oil B, whilst Nakhla is 20% of Olive oil A and 80% of Olive oil B. The merchant sells Gahwa at OR2.00 per Litre to shops and Nakhla at OR1.20. The blending, bottling and distribution costs are OR0.50 per Litre for both brands. The Olive oil merchant has agreed to buy at least 24,000 Litres of Olive oil A this year and there is a maximum of only 120,000 Litres of Olive oil B available. The merchant estimates that the maximum sales during the year of Gahwa are 50.000 Litres but that the demand for the Nakhla is unlimited. The Olive oil merchant has only OR60,000 available to finance the purchase of Olive oil A and B this year. How many Litres of Gahwa and Nakhla should the Olive oil merchant produce to maximise this year's profits?

Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
ChapterC: Cases
Section: Chapter Questions
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Problem 5: A Omani Olive oil merchant imports two Olive oil brands, A and B, from Barazil, then blends and bottles them himself to produce two own label brands, Gahwa and Nakhla. The two Olive oil brands A and B cost OR0.80 and OR0.20 per Litre respectively delivered to his blending and bottling factory. Gahwa consists of 60% Olive oil A and 40% of Olive oil B, whilst Nakhla is 20% of Olive oil A and 80% of Olive oil B. The merchant sells Gahwa at OR2.00 per Litre to shops and Nakhla at OR1.20. The blending, bottling and distribution costs are OR0.50 per Litre for both brands. The Olive oil merchant has agreed to buy at least 24,000 Litres of Olive oil A this year and there is a maximum of only 120,000 Litres of Olive oil B available. The merchant estimates that the maximum sales during the year of Gahwa are 50.000 Litres but that the demand for the Nakhla is unlimited. The Olive oil merchant has only OR60,000 available to finance the purchase of Olive oil A and B this year. How many Litres of Gahwa and Nakhla should the Olive oil merchant produce to maximise this year's profits?
Transcribed Image Text:Problem 5: A Omani Olive oil merchant imports two Olive oil brands, A and B, from Barazil, then blends and bottles them himself to produce two own label brands, Gahwa and Nakhla. The two Olive oil brands A and B cost OR0.80 and OR0.20 per Litre respectively delivered to his blending and bottling factory. Gahwa consists of 60% Olive oil A and 40% of Olive oil B, whilst Nakhla is 20% of Olive oil A and 80% of Olive oil B. The merchant sells Gahwa at OR2.00 per Litre to shops and Nakhla at OR1.20. The blending, bottling and distribution costs are OR0.50 per Litre for both brands. The Olive oil merchant has agreed to buy at least 24,000 Litres of Olive oil A this year and there is a maximum of only 120,000 Litres of Olive oil B available. The merchant estimates that the maximum sales during the year of Gahwa are 50.000 Litres but that the demand for the Nakhla is unlimited. The Olive oil merchant has only OR60,000 available to finance the purchase of Olive oil A and B this year. How many Litres of Gahwa and Nakhla should the Olive oil merchant produce to maximise this year's profits?
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