orient paper operates cardboard plants in quebec and st. john.

Project Description:

orient paper operates cardboard plants in quebec and st. john. the quebec plant has been operating at 75%
capacity, producing 2,700 tonnes/month of cardboard at a total cost of $77/tonne. included in the total cost per tonne
is the cost of waste paper, the major raw material. each 100 tonnes of cardboard requires 80 tonnes of waste paper.
up to 1,400 tonnes/month of waste paper can be purchased locally for $18.75/tonne, and any desired amount of
additional waste paper can be purchased through a broker for $27.50/tonne. of the total monthly cost at the quebec
plant, $58,150 is a fixed overhead cost. the remainder, excluding the cost of waste paper, varies in proportion to
output.
the st. john plant has been operating at 60% capacity, producing 3600 tonnes/month at a cost of $85/tonne. as in
quebec, 100 tonnes of output needs 80 tonnes of waste paper. local waste paper costs $20/tonne, and is limited to a
maximum of 4,000 tonnes/month. any amount of additional waste paper is available through a broker at
$27.50/tonne. the fixed overhead cost is $108,000/month.
orient paper’s total production of 6,300 tonnes/month is to be continued. would there be any advantage in shifting
part of the scheduled production from one plant to the other? if so, which plant’s production should be increased,
and by how much? formulate the firm’s optimal production problem as an lp. using the lp formulation; see if you
can come up with a “reasonable” (not necessarily optimal) solution.
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Price Type: Negotiable

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