Start with the linear programming problem Maximize profit : 5A + 4C

With constraints C&D 12A + 6C 20400 S 9A + 15C 21600 I&P 6A + 6C 12000 A, C 0

A. Use Solver on the linear programming problem. Write out the optimal amounts of A and C produced and the total maximum profit at the optimal point. See next slide

Here we consider profit transformed to a nonlinear function. Now, if A = quantity of good A, Pa = price of good A, C = quantity of good C, and Pc = price of good C, then the demand for A and C as functions of price are A = 8000 - 1000Pa and C = 4000 - 500Pc

B. If the cost of A is $2 per unit and cost of C = $2 per unit, use Solver on the nonlinear programming problem. Write out the optimal amounts of A and C produced and the total maximum profit at the optimal point.

C. compare the two solutions.

D. Attach you Excel file with answer reports