Solve Using Excel

The research and development division of the Progress Company has been developing four possible new product lines. Management must now make a decision as to which of these four products actually will be produced and at what levels. Therefore, an operations research study has been requested to find the most profitable product mix. A substantial cost is associated with beginning the production of any product, as given in the first row of the following table. Managements objective is to find the product mix that maximizes the total profit (net revenue minus unit costs).

There is currently 6,000 man hours of existing production capacity. The production resources required per unit are provided in the table above. Market research has shown that demand for the products are limited to the values provided in the table. a. Formulate this problem as an Integer Linear Program Model b. Which products and what quantities should be selected based on the constraints given.

Unit cost Marginal revenue Unit Manhours Market Demand 1 $32 $70 5 150 Product 2 3 $21 $37 $60 $90 3 6 70 40 4 $34 $80 4 125 Unit cost Marginal revenue Unit Manhours Market Demand 1 $32 $70 5 150 Product 2 3 $21 $37 $60 $90 3 6 70 40 4 $34 $80 4 125