A federal regulation required that the average of the miles per gallon computed over all automobiles...

  

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A federal regulation required that the average of the miles per gallon computed over all automobiles sold by an automobile company in a specific year be at least 23 miles per gallon. Let us consider a hypothetical case for the Ford Motor Company. Assume that Ford sold only the four car types: Crown Victoria, Taurus, Escort, and Fiesta. Various parameters of theses cars are listed below: CAR Fiesta Escort Taurus Crown Vic. MILES/GALLON 322 33 26 24 13 MARGINAL PRODUCT COST 7000 10250 15000 23000 YEARLY CAPACITY IN UNITS 1,000,000 3,000,000 2,000,000 SELLING PRICE There is some flexibility in the production facilities so capacities may apply to pairs of car types. These limitations are: CAR TYPES LIMITED 8500 13250 19500 28500 Fiesta Taurus plus Escorts Crown Vic. plus Taurus There is a sales capacity limit of 4,500,000 on the total of all cars sold. How many of each car type should Ford plan to sell? A federal regulation required that the average of the miles per gallon computed over all automobiles sold by an automobile company in a specific year be at least 23 miles per gallon. Let us consider a hypothetical case for the Ford Motor Company. Assume that Ford sold only the four car types: Crown Victoria, Taurus, Escort, and Fiesta. Various parameters of theses cars are listed below: CAR Fiesta Escort Taurus Crown Vic. MILES/GALLON 322 33 26 24 13 MARGINAL PRODUCT COST 7000 10250 15000 23000 YEARLY CAPACITY IN UNITS 1,000,000 3,000,000 2,000,000 SELLING PRICE There is some flexibility in the production facilities so capacities may apply to pairs of car types. These limitations are: CAR TYPES LIMITED 8500 13250 19500 28500 Fiesta Taurus plus Escorts Crown Vic. plus Taurus There is a sales capacity limit of 4,500,000 on the total of all cars sold. How many of each car type should Ford plan to sell?

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To determine the number of each car type Ford should plan to sell we need to consider the given info... View the full answer