Question

A manufacturer has the following orders in hand: Order X Y Z Units 60,000 90,000 300,000 Selling Price/unit .45 .24 .16 136

The manufacturer has four different production processes available for satisfying these orders. Each process produces a different combination of the three products. Each process costs $0.50 per unit. The manufacturer must satisfy the volumes specified in the above table. The manufacturer formulated the following LP: Min .5 A + .5 B + .5 C + .5 D s.t. A >= 60000 2 B + C >= 90000 A + C + 3 D >= 300000 a) Which products are produced by process C? b) Suppose the agreements with customers are such that, for each product, the manufacturer is said to have filled the order if the manufacturer delivers an amount within + or 10% of the “nominal” volume in the above table. The customer pays for whatever is delivered. Modify the formulation to incorporate this more flexible arrangement.

Answer 1