Analysis Sensitivity

Changing Cells Final Value Objective Coefficient 110 Reduced Cost -26 0 Allowable Increase 26 Allowable Decrease 1E+30 Cell $B$4 $C$4 $ $D$4 $ SE$4 0 Name Product 1 1 Product 2 Product 3 Product 4 150 150 58 0 27 100 200 8 175 70 1E130 32 0 Constraints Shadow Final Value Price Constraint R.H. Side 750 250 Allowable Decrease 300 750 Cell Name $G$8 Labor, Hours SGS9 9 Machine 1, Hours $G$10 Machine 2, Hours $G$11 Sheet Metal, Feet 8 Allowable Increase 400 75 100 300 8 50 250 420 3,800 0 500 80 4 3800 780 1. Refer to the Sensitivity Report. Suppose the regular pay rate for labor is $12 per hour. If you were the manager, how many overtime hours would you authorize if overtime is paid $18 per hour? Explain your reasoning and the impact of authorizing overtime. 4. Refer to the Sensitivity Report. Suppose costs go up in a way that reduces all profit margins by about 10%. What impact would this have on the optimal production plan? Explain briefly. 5. Refer to the Sensitivity Report. Suppose the company has the opportunity to sell 500 feet of Sheet Metal for $3 more than they paid for it. Should they sell the Sheet Metal? Explain your reasoning. 2. Refer to the Sensitivity Report. Product 3 currently requires 6.5 hours of labor, 2 3 hours on Machine 1, 3.5 hours on Machine 2, and 10 feet of sheet metal. Company engineers believe Machine 1 can be modified to be more efficient. What time requirement for Machine 1 would make Product 3 profitable? Briefly explain your reasoning. 6. Refer to the Sensitivity Report. A new product has been proposed that is expected to have a unit profit of $160. Company engineers estimate the new product would require 11 hours of labor, 3 hours on Machine 1, 15 hours on Machine 2, and 14 feet of Sheet Metal. Since this new product has a high unit profit and uses Machine 2 predominantly, which is a slack resource, management is very enthusiastic about pursuing it. As specifically as possible, analyze the financial implications of adding the proposed product and describe how you would explain your conclusion to management. 3. Refer to the Sensitivity Report. The company's marketing department believes they need to produce 20 units of Product 1 to round out their product line. What's the financial impact of making and selling 20 units of Product 1