Question: ( a ) [ 5 points ] Formulate this problem as a linear programming problem. ( b ) [ 5 points ] Using Excel Solver,

(a)[5 points] Formulate this problem as a linear programming problem.
(b)[5 points] Using Excel Solver, solve for the optimal solution for this problem to determine
the number of Family Thrillseekers and the number of Classy Cruisers that should be
assembled.
Before she makes her final production decisions, Rachel plans to explore the following
questions independently except where otherwise indicated.
(c)[2.5 points] The marketing department knows that it can pursue a targeted $500,000
advertising campaign that will raise the demand for the Classy Cruiser next month by 20
percent. Should the campaign be undertaken?
5
(d)[5 points] Rachel knows that she can increase next months plant capacity by using
overtime labor. She can increase the plants labor hour capacity by 25 percent. With the
new assembly plant capacity, how many Family Thrillseekers and how many Classy
Cruisers should be assembled?
(e)[2.5 points] Rachel knows that overtime labor does not come without an extra cost. What
is the maximum amount she should be willing to pay for all overtime labor beyond the cost
of this labor at regular time rates? Express your answer as a lump sum.
(f)[5 points] Rachel explores the option of using both the targeted advertising campaign and
the overtime labor-hours. The advertising campaign raises the demand for the Classy
Cruiser by 20 percent, and the overtime labor increases the plants labor-hour capacity by
25 percent. How many Family Thrillseekers and how many Classy Cruisers should be
assembled using the advertising campaign and overtime labor-hours if the profit from each
Classy Cruiser sold continues to be 50 percent more than for each Family Thrillseeker sold?
(g)[5 points] Knowing that the advertising campaign costs $500,000 and the maximum usage
of overtime labor-hours costs $1,600,000 beyond regular time rates, is the solution found
in part (f) a wise decision compared to the solution found in part (b)?
(h)[5 points] Automobile Alliance has determined that dealerships are actually heavily
discounting the price of the Family Thrillseekers to move them off the lot. Because of a
profit-sharing agreement with its dealers, the company is therefore not making a profit of
$3,600 on the Family Thrillseeker but is instead making a profit of $2,800. Determine the
number of Family Thrillseekers and the number of Classy Cruisers that should be
assembled given this new discounted price.
(i)[5 points] The company has discovered quality problems with the Family Thrillseeker by
randomly testing Thrillseekers at the end of the assembly line. Inspectors have discovered
that in over 60 percent of the cases, two of the four doors on a Thrillseeker do not seal
properly. Because the percentage of defective Thrillseekers determined by the random
testing is so high, the floor supervisor has decided to perform quality control tests on every
Thrillseeker at the end of the line. Because of the added tests, the time it takes to assemble
one Family Thrillseeker has increased from 6 to 7.5 hours. Determine the number of units
of each model that should be assembled given the new assembly time for the Family
Thrillseeker.
(j)[5 points] The board of directors of Automobile Alliance wishes to capture a larger share
of the luxury sedan market and therefore would like to meet the full demand for Classy
Cruisers. They ask Rachel to determine by how much the profit of her assembly plant
would decrease as compared to the profit found in part (b). They then ask her to meet the
full demand for Classy Cruisers if the decrease in profit is not more than $2,000,000.
(k)[5 points] Rachel now makes her final decision by combining all the new considerations
described in parts (g),(h), and (i). What are her final decisions on whether to undertake the
advertising campaign, whether to use overtime labor, the number of Family Thrillseekers
to assemble, and the number of Classy Cruisers to assemble?

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