Hill-O-Beans Coffee Company blends four component beans into three final blends of coffee: one is sold to
Question:
The processor's plant can handle no more than 100,000 pounds per week, but there is virtually unlimited demand for the final blends. However, the marketing department requires minimum production levels of 10,000, 25,000, and 30,000 pounds, respectively, for the hotel, restaurant, and market blends.
a. In order to maximize weekly profit, how many pounds of each component should be purchased?
b. What is the economic value of an additional pound's worth of plant capacity?
c. How much (per pound) should Hill-O-Beans be willing to pay for additional pounds of Liberica in order to raise total profit?
d. Construct a graph to show how the optimal profit varies with the minimum weekly production level of the hotel blend.
e. Construct a graph to show how the optimal profit varies with the unit cost of Robusta beans.
Step by Step Answer:
Management Science The Art of Modeling with Spreadsheets
ISBN: 978-1118582695
4th edition
Authors: Stephen G. Powell, Kenneth R. Baker