question archive 1) Suppose that a firm is planning to produce two components that are inputs in the production of a number of major household appliances
1) Suppose that a firm is planning to produce two components that are inputs in the production of a number of major household appliances
Subject:Operations ManagementPrice: Bought3
1) Suppose that a firm is planning to produce two components that are inputs in the production of a number of major household appliances. Based on market experience, the firm estimates their profit on the two components will be $11 for component 1 and $15 for component 2. The table represents the per unit labour and per unit copper required to construct the components (along with the total availability). Product Labour (Hours) Copper (Kgs) Component 1 Component 2 5 Availability 120 220 Use the information given above to answer the following questions: (a) What is the linear programming model/problem here? (Just the objective func- tion and constraints here.) (b) What is the optimal choice? (c) Present a graphical solution to your answer. (d) Are there any slack variables? (e) Suppose your estimate of the profit for component 1 is normally distributed with standard deviation of o = 1. What is the probability this model would predict the correct outcome? (f) Ignoring the previous part, suppose the firm becomes concened that the profit per unit for component 1 is $10.50 as the market price appears to be weaker than expected. The firm can lock in a price of $11 per unit; however, it has to agree to produce at least 40 units of component 1. What would you recommend? Are there any slack variables?
