Using Solver for Constraints

Austin Enterprises makes and sells three types of coats. Management is trying to determine the most profitabe mix. Sales prices, demand, and use of manufacturing inputs follows:

Basic

Plus

Optimal

The company faces two constraints:

Sales Price

$ 30

$ 50

$ 190

1) The volume of each type of shirt that it can sell (see maximum annual demand)

Maximum annual demand (units)

8,000

10,000

4,000

2) Direct labor hours per year caused by the plant layout.

Input requirements per unit

3) Machine Hours

Direct materials (yards)

0.5

0.3

3.0

Direct labor (hours)

0.7

2.0

5.0

Additional Constraints:

REQUIRED:

Number of coats

Direct material constraint (yards)

25,000

Basic

Plus

Optimal

Direct labor constraint (hours)

30,000

What sales mix will optimize profits?

What is the profit at this level of sales?

Costs:

Variable costs

Direct Material (cost per yard)

15

Direct labor (cost per hour)

16

Factory overhead (per DLH)

3

Marketing (percent of sales price)

10%

Fixed costs

Manufacturing

$ 36,000

Marketing

8,000

Administration

20,000