1. [15] A new product is being developed by a food manufacturer. Depending on the quality...

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1. [15] A new product is being developed by a food manufacturer. Depending on the quality of raw materials, different yields are expected, and the quality of the final products will also vary considerably. Three alternatives have been identified, which would use existing equipment, but different process conditions and specifications. Estimated potential sales and pricing strategies are summarized as follows. Alternative 1 2 3 Pounds of raw material A per unit of product Pounds of raw material B per unit of product Pounds of raw material C per unit of product Other processing costs ($/unit product) Expected wholesale price ($/unit product) Annual volume of sales (units of product) 0.05 0.07 0.075 0.19 0.18 0.26 0.14 0.12 0.17 0.16 0.24 0.23 0.95 1.05 1.25 1,000,000 1,150,000 900,000 Given that the cost of raw material A is $3.45/lb, the cost of raw material B is $1.07/lb, and the cost of raw material C is $1.88/lb, indicate which alternative seems to be the best according to the estimated data. The objective is to maximize total profit per year. 1. [15] A new product is being developed by a food manufacturer. Depending on the quality of raw materials, different yields are expected, and the quality of the final products will also vary considerably. Three alternatives have been identified, which would use existing equipment, but different process conditions and specifications. Estimated potential sales and pricing strategies are summarized as follows. Alternative 1 2 3 Pounds of raw material A per unit of product Pounds of raw material B per unit of product Pounds of raw material C per unit of product Other processing costs ($/unit product) Expected wholesale price ($/unit product) Annual volume of sales (units of product) 0.05 0.07 0.075 0.19 0.18 0.26 0.14 0.12 0.17 0.16 0.24 0.23 0.95 1.05 1.25 1,000,000 1,150,000 900,000 Given that the cost of raw material A is $3.45/lb, the cost of raw material B is $1.07/lb, and the cost of raw material C is $1.88/lb, indicate which alternative seems to be the best according to the estimated data. The objective is to maximize total profit per year.

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