Question: Answer questions 4-5 based on the following information: A small firm makes three products, which all follow the same three-step (milling, inspection, and drilling) process.



Answer questions 4-5 based on the following information: A small firm makes three products, which all follow the same three-step (milling, inspection, and drilling) process. Product A requires 6 minutes of milling, 5 minutes of inspection, and 4 minutes of drilling; product B requires 2.5 minutes of milling, 2 minutes of inspection, and 2 minutes of drilling; and product C requires 5 minutes of milling, 4 minutes of inspection, and 8 minutes of drilling. The firm has 20 hours available during the next period (next week) for milling, 15 hours for inspection, and 24 hours for drilling. Product A contributes $6.00 per unit to profit, product B contributes $4.00 per unit, and product C contributes $10.00 per unit. 1 hour has 60 minutes. The firm needs to determine the quantities of products A,B, and C to maximize the total profit. Below is the Linear Programming formulation of the problem. x1= number of product A x2= number of product B x3= number of product C. Max6x1+4x2+10x3 Subject to: 6x1+2.5x2+5x31200 Milling 5x1+2x2+4x3900 Inspection 4x1+2x2+8x31440 Drilling x1,x2,x30 Below is the sensitivity report when solving the above problem using excel. The unit profit of product C increases from $10 to $15. Will the optimal solution (the optimal quantities of Product A, Product B, and Product C) change? No. The current solution will remain optimal. The change is outside the range of optimality and, thus, recalculation is needed. Question 5 1 pts The firm can obtain an additional two hours of inspection time at the cost of $60 /hour. Do you recommend the firm obtain the additional two hours of inspection time? Yes. Not enough information to make a judgement. The change is not within the range of feasibility and therefore shadow price is not valid. No
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