Native Customs sells two popular styles of hand-sewn footwear: a sandal and a moccasin. The cost to
Question:
Native Customs sells two popular styles of hand-sewn footwear: a sandal and a moccasin. The cost to make a pair of sandals is $18, and the cost to make a pair of moccasins is $24. The demand for these two items is sensitive to the price, and historical data indicate that the monthly demands are given by S = 400 − 10P1 and M = 450 − 15P2, where S = demand for sandals (in pairs), M = demand for moccasins (in pairs), P1 = price for a pair of sandals, and P2 = price for a pair of moccasins. To remain competitive, Native Customs must limit the price (per pair) to no more than $60 and $75 for its sandals and moccasins, respectively. Formulate this nonlinear programming problem AND find the optimal production quantities and prices for sandals and moccasins that maximize total monthly profit.
Introduction to Probability and Statistics
ISBN: 978-1133103752
14th edition
Authors: William Mendenhall, Robert Beaver, Barbara Beaver