# Gulf Coast Electronics is ready to award contracts for printing their annual report. For the past several years, the four-color annual report has been printed by Johnson Printing and Lakeside Litho. A new firm, Benson Printing, inquired into the possibility of doing a portion of the printing. The quality and service level provided by Lakeside Litho has been extremely high;

Chapter 8, Problems #31
Gulf Coast Electronics is ready to award contracts for printing their annual report. For the past several years, the four-color annual report has been printed by Johnson Printing and Lakeside Litho. A new firm, Benson Printing, inquired into the possibility of doing a portion of the printing. The quality and service level provided by Lakeside Litho has been extremely high; in fact, only 0.5% of their reports have had to be discarded because of quality problems. Johnson Printing has also had a high quality level historically, producing an average of only 1% unacceptable reports. Because Gulf Coast Electronics has had no experience with Benson Printing, they estimated their defective rate to be 10%. Gulf Coast would like to determine how many reports should be printed by each firm to obtain 75,000 acceptable-quality reports. To ensure that Benson Printing will receive some of the contract, management specified that the number of reports awarded to Benson Printing must be at least 10% of the volume given to Johnson Printing. In addition, the total volume assigned to Benson Printing, Johnson Printing, and Lakeside Litho should not exceed 30,000, 50,000, and 50,000 copies, respectively. Because of the long-term relationship with Lakeside Litho, management also specified that at least 30,000 reports should be awarded to Lakeside Litho. The cost per copy is \$2.45 for Benson Printing, \$2.50 for Johnson Printing, and \$2.75 for Lakeside Litho.
a. Formulate and solve a linear program for determining how many copies should be assigned to each printing firm to minimize the total cost of obtaining 75,000 acceptable-quality reports.
b. Suppose that the quality level for Benson Printing is much better than estimated. What effect, if any, would this quality level have?
c. Suppose that management is willing to reconsider their requirement that Lakeside Litho be awarded at least 30,000 reports. What effect, if any, would this consideration have?

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Related Book For

## Quantitative Methods for Business

11th Edition

Authors: David Anderson, Dennis Sweeney, Thomas Williams, Jeffrey cam

ISBN: 978-0324651751