Statistics

Klein Industries manufactures three types of portable air compressors: small, medium, and large, which have unit profits of $20.50, and $42.00, respectively.  the projected monthly sales are:

                   small      medium  large

Minimum  14,000   6,200        2,600

Maximum  21,000  12,500      23,400

The production process consists of three primary activities: bending and forming, welding, and painting. The amount of time in minutes needed to process each product in each department is shown below:

                                     small  medium  large  available time

Bending/forming       0.4      0.7            0.8      23,400

Welding                      0.6      1.0            1.2      23,400

Painting                      1.4      2.6            3.1      46,800

How many of each type of air compressor should the company produce to maximize profit?

a. Formulate and solve a linear optimization model using the auxiliary variable cells method and write a short memo to the production manager explaining the sensitivity information

b. Solve the model without auxiliary variables and explain teh relationship between the reduced costs and the shadow prices found in part A.

Solution tip: you must use Solver tool in Excel.  set your constraints right, and fill in the solver dialogue box properly.