# Question: Automobile Alliance a large automobile manufacturing company organizes the vehicles

Automobile Alliance, a large automobile manufacturing company, organizes the vehicles it manufactures into three families: a family of trucks, a family of small cars, and a family of midsized and luxury cars. One plant outside Detroit, MI, assembles two models from the family of midsized and luxury cars.

(a) Formulate and solve a linear programming problem to determine the number of Family Thrillseekers and the number of Classy Cruisers that should be assembled. Before she makes her final production decisions, Rachel plans to explore the following questions independently except where otherwise indicated.

(b) The marketing department knows that it can pursue a targeted $500,000 advertising campaign that will raise the demand for the Classy Cruiser next month by 20 percent. Should the campaign be undertaken?

(c) Rachel knows that she can increase next month’s plant capacity by using overtime labor. She can increase the plant’s labor-hour capacity by 25 percent. With the new assembly plant capacity, how many Family Thrillseekers and how many Classy Cruisers should be assembled?

(d) Rachel knows that overtime labor does not come without an extra cost. What is the maximum amount she should be willing to pay for all overtime labor beyond the cost of this labor at regular time rates? Express your answer as a lump sum.

(e) Rachel explores the option of using both the targeted advertising campaign and the overtime labor-hours. The advertising campaign raises the demand for the Classy Cruiser by 20 percent, and the overtime labor increases the plant’s labor-hour capacity by 25 percent. How many Family Thrillseekers and how many Classy Cruisers should be assembled using the advertising campaign and overtime labor-hours if the profit from each Classy Cruiser sold continues to be 50 percent more than for each Family Thrillseeker sold?

(a) Formulate and solve a linear programming problem to determine the number of Family Thrillseekers and the number of Classy Cruisers that should be assembled. Before she makes her final production decisions, Rachel plans to explore the following questions independently except where otherwise indicated.

(b) The marketing department knows that it can pursue a targeted $500,000 advertising campaign that will raise the demand for the Classy Cruiser next month by 20 percent. Should the campaign be undertaken?

(c) Rachel knows that she can increase next month’s plant capacity by using overtime labor. She can increase the plant’s labor-hour capacity by 25 percent. With the new assembly plant capacity, how many Family Thrillseekers and how many Classy Cruisers should be assembled?

(d) Rachel knows that overtime labor does not come without an extra cost. What is the maximum amount she should be willing to pay for all overtime labor beyond the cost of this labor at regular time rates? Express your answer as a lump sum.

(e) Rachel explores the option of using both the targeted advertising campaign and the overtime labor-hours. The advertising campaign raises the demand for the Classy Cruiser by 20 percent, and the overtime labor increases the plant’s labor-hour capacity by 25 percent. How many Family Thrillseekers and how many Classy Cruisers should be assembled using the advertising campaign and overtime labor-hours if the profit from each Classy Cruiser sold continues to be 50 percent more than for each Family Thrillseeker sold?

**View Solution:**## Answer to relevant Questions

This case focuses on a subject that is dear to the heart of many students. How should the manager of a college cafeteria choose the ingredients of a casserole dish to make it sufficiently tasty for the students while also ...The WorldLight Company produces two light fixtures (products 1 and 2) that require both metal frame parts and electrical components. Management wants to determine how many units of each product to produce so as to maximize ...Reconsider the model in Prob. 4.1-5. (a) Work through the simplex method (in algebraic form) by hand to solve this model. (b) Repeat part (a) with the corresponding interactive routine in your IOR Tutorial. Repeat Prob. 4.3-3, using the tabular form of the simplex method. A certain linear programming model involving two activities has the feasible region shown below. The objective is to maximize the total profit from the two activities. The unit profit for activity 1 is $1,000 and the unit ...Post your question