A manufacturer can sell product 1 at a profit of $20 per unit and product 2 at a profit of
Question:
A manufacturer can sell product 1 at a profit of $20 per unit and product 2 at a profit of $40 per unit. Three units of raw material are needed to manufacture one unit of product 1, and six units of raw material are needed to manufacture one unit of product 2. A total of 15,000 units of raw material are available. If any product 1 is produced, a setup cost of $20,000 is incurred; if any product 2 is produced, a setup cost of $35,000 is incurred.
a. Determine how to maximize the manufacturer’s profit.
b. If either of the products is not produced in the optimal solution, use SolverTable to see how much this product’s unit profit must be before it will be produced, and then use SolverTable again to see how much this product’s fixed cost must be decreased before it will be produced.
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Practical Management Science
ISBN: 978-1305250901
5th edition
Authors: Wayne L. Winston, Christian Albright