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BUS404 ON1 Final Exam (213)

Section #1 [20]

XYZ Corporation wants you to set up an LP to optimize the coming month’s production to maximize profits. Their product range consists of three models, Model A, Model B, and Model C.

To manufacture an item requires labour time and materials. The labour time to make an A, B or C is 0.5, 0.7 and 0.8 hours respectively. There are 160 regular hours available during the month. The material needed to make an A, B or C is 1.2, 1.1 and 1.4 kg respectively. The company has 240 kg of material available for production. The profits generated by producing an A, B or C are $40, $50 and $60 respectively.

The company can also run in overtime, up to 20 hours. Because of the reduced maintenance costs resulting from longer production runs using overtime, the profit for each unit produced during overtime increases by $10.

Management have specified that at least 40% of all units produced must be Model C’s. Since sales contracts for six Model B’s have been signed, they must be produced.

Using the Excel template provided, formulate this problem as an LP.