A. What is the optimal solution and total profit? B. If ABC could obtain additio

Question

A. What is the optimal solution and total profit? B. If ABC could obtain additional this benefit? machine time what would it be worth? Within what limits could ABC be sure of C. If ABC could obtain additional labor time what would it be worth? D. How much would the profit for X1 have to increase in order for the firm to start is considering introducing a new product, X4, and the Finance manager wants to know how much profit it will have to make in order to be added to the product mix. The X4 will use 4 minutes of machine time, 6 hours of labor and 3 pounds of material. Calculate the opportunity cost of producing this new product. F. An additional constraint has arisen because another Division of ABC needs an assembly unit for its products. ABC estern will be limited to 300 hours on this unit. X1 requires ten hours, X2 fifteen hours and X3 six hours. Will the current solution satisfy this new constraint or will the problem have to be reformulated and re-solved? G. If the contract for X2 was increased to 15 units, what would be the effect on the firm's profit? Microsoft Excel 12.0 Sensitivity Report Adjustable Cells Final Reduced Objective Allowable Allowable Cost Coefficient Increase Decrease 13 1E+30 2 1E+30 40 0 15 1Et30 1.5 Cell Name Value BS12 x1 SC$12 X2 13 100 12 18 SDS12X3 Constraints Final Shadow Constraint Allowable Allowable Value Price R.H.Side Increase Decrease 2600 288 1E+3028 58$18 Materials (pounds)180 O200 1E+3020 Cell Name BS16 Machine time (min) 160 SBS17 Labor (hours) SBS19 x2 regd 10 10

Explanation / Answer

As per the sensitivity analysis reprt, the Allowable increase of "X2 reqd" is 6. So, the solution (firm profit) will remain same if the Constraint RH side is increased from 10 to 16 . Hence, if the contract for X2 was increased to 15 units, (which is less than 16 units), the firm's profit will remain the same.

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