Question

inisiana For policy on late submissions, refer to the courses syllabus. sldowolla oldswollA nenes woboda able H. she Sulev S
Falditas Inc. have to decide on their production quantities for next week as to maximize their profit. They have 1200 yards o
the answer to this question must be made on the basis of the information provided in the table above. You are free to re-run
0 0
Add a comment Improve this question Transcribed image text
Answer #1

The above set of questions can be answered using the above given data only. We need not to re-run any model again.

(a) Marginal Profit on Long Shirt changed to $210:

As we can see that in the first table allowable increase for the L units is 35 units, we need not to do any changes in the output. Allowable increase here means that by how much we can increase the cofficient of L units i.e. marginal profit on L units such that our final output won't change. Any change after this range would make this output obsolete and we need to re - run the above model only to get the results. Since we are changing it by only 20, thus, our this results would prevail.

New Optimal Profit = Optimal Profit Earlier + Change in Profit (Change in Marginal Profit on L * L units)

New Optimal Profit = $40,900 + (210 - 190) * 100

New Optimal Profit = $42,900

(b) Material Changes:

In case of Material, we can see the 2nd table to get more insights. Against Materials, allowable increase is 133.33 which means we can increase our material by 133.33 yards more without affecting our results. So, if material is available we can go ahead with it but for not more than 133.33 because then our results might change.

But here, we also need to given due consideration to the price which we might pay for this material acquisition. As per that table, Shadow Price for material is $34.5 which means we would be better off if we can acquire materials for less than that amount. If we pay more than that for acquiring then we might get sub - optimal results.

In this case, we are getting material for $8/yard, thus we should go ahead with it but for quantity not more than 133.33, otherwise we would need to re - run our model and then $8 might be expensive. So, upto 133.33 yards @ $8/ yard is good deal. We would be even willing to pay more for this extra material.

How much more = Shadow Price - Deal Price

How much more = 34.5 - 8 = $26.5 / yard.

We would be even willing to pay $26.5 more for 1 yard of material.

(c) Minimum Requirement for Long Skirts:

For long skirts, allowable decrease is 100 units. It means even if reduce the amount of Long skirts produced by 100 units, it won't change our results. So, if the minimum requirement of long skirts is reduced to 75 units only, we need not to change our model. Our existing model would work. The amount of gain that we would get can be determined by the shadow price of it. Its shadow price is negative, it means that if this requirement is reduced by even 1 unit, we would gain $35 and vice - versa.

Gain on reducing minimum requirement for Long Skirts = Shadow Price * Number of Units reduced

Gain on reducing minimum requirement for Long Skirts = 35 * 25 = $875.

Overall Optimal Profit = $40900 + $875 = $41775.

Add a comment
Know the answer?
Add Answer to:
inisiana For policy on late submissions, refer to the course's syllabus. sldowolla oldswollA nenes woboda able...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • How many footballs of each type should Supersport produce in order to increase to maximize the pr...

    How many footballs of each type should Supersport produce in order to increase to maximize the profit? How much maximum profit it would make? Overtime rates in the sewing department are $12 per hour. Which of the following is correct? Get overtime up to 100 hours as it increases net profit by $8 per hour. Get as much overtime as possible as it increases net profit by $8 per hour Do not get overtime because it would not help in...

  • 1. Which of the following trades implies that ownership has been taken? a. Buying a futures...

    1. Which of the following trades implies that ownership has been taken? a. Buying a futures contract. b. Selling a futures contract. c. Buying a stock. d. Shorting a stock. e. None of the above implies ownership. The following transactions are the only ones made during the first 4 days a futures contract trades. Answer question 2 based on this table. DAY TRANSACTION S O 1 A Long 30, B Short 30 2 A Long 55, C Short 55 3...

  • Please use the above info to answer the next problems B C D 1 Due to...

    Please use the above info to answer the next problems B C D 1 Due to its popularity, the Black and White Handbag (BW14293) is normally a stock item. However, the 2 handbag is currently out of stock. Rather than producing only enough units to fill Katie's order, 3 management would like to produce a job (Job 114) that is large enough to fill Katie's order and replenish 4 stock. The fabric used for this job can be stacked four...

  • B Monopoly C Oligopoly (not Cutthroat) D Monopolstic Competitor E Cutthroat Oligopoly Figure 2 F Could be e...

    B Monopoly C Oligopoly (not Cutthroat) D Monopolstic Competitor E Cutthroat Oligopoly Figure 2 F Could be either B, C, or De 8 The firm in figure 2 is A Breaking even B Making a Profit 7 C Taking a loss D Cannot determine from the intormation given 5 7 The amount of the profit or loss is 4 This firm is in the A Short Run 31 B Long Run C. Intermediate run D Cannot determine from the information...

  • Business 1B - Managerial Accounting - Master Budget Comprehensive Project Radical Boards, Inc. manufactures and sells...

    Business 1B - Managerial Accounting - Master Budget Comprehensive Project Radical Boards, Inc. manufactures and sells a single model The unit cost for ending FG inventory at 12/31/11 was $374.80. of snowboard, the Vortex. In the summer of 2011, Ignore Work In Process Iggy Sawdust, CPA, provided data for the 2012 budget: Direct Material Requirements (per snowboard) The December 2012 Budget Includes the following selected balances: Wood 5 board feet (b.f.) Cash $      10,000.00 Fiberglass 6 yards Property, Plant, and Equipment...

  • Problem 3: Activity-Based Costing (20 points) University Student Cleanup provides housecleaning services to its clients (primarily...

    Problem 3: Activity-Based Costing (20 points) University Student Cleanup provides housecleaning services to its clients (primarily university students). During its first year, USC had a simple business model where it charged its customers $24 per hour for services while paying its cleaning specialists $12 per hour. The owner simply assumed the 100% markup over hourly direct labor costs would be enough to cover all additional costs and make a good profit. Unfortunately, this did not tum out to be the...

  • competitive firm is the . 4. the vert Mive is atroduction. The short-run supply curve of...

    competitive firm is the . 4. the vert Mive is atroduction. The short-run supply curve of ortion of its short-tun marginal cost curve that is competitive firm in the above its average variable cost curve, The o ward sloping an u petitive firm is the portion of its short-run marginal cost curve that supply curve of a Leuward-sloping and lies above its long-run average cost curve. Example: A firm has the long-run cost function cy) = 2y + 200 for...

  • Data Analysis Project Part 1 Custom Fabric Ventures is a small company that produces fabric-based wardrobe...

    Data Analysis Project Part 1Custom Fabric Ventures is a small company that produces fabric-based wardrobe accessories (such as, handbags, scarves, and headbands) and home accessories (such as placemats, pillows, and window treatments).   The company keeps a limited number of popular items in stock, but primarily produces custom orders. Customers are able to choose from a wide selection of styles, sizes, and fabrics for each type of product. Most of the company’s customers are small boutiques, home décor shops, and home-decorators...

  • Petrell Inc. is a wholesale distributor supplying a wide range of high-end cooking knives for the...

    Petrell Inc. is a wholesale distributor supplying a wide range of high-end cooking knives for the professional chef. Petrell has an enviable reputation for quality of its products. The demand for Petrell ’s products is so great that at times Petrell cannot satisfy the demand and must delay or refuse some orders, in order to maintain its production quality. Additionally, Petrell purchases some of its products from outside suppliers in order to meet the demand. These suppliers are carefully chosen...

  • HOME ASSIGNMENT PROBLEM №1 What is a forward price of an index JKL given the following...

    HOME ASSIGNMENT PROBLEM №1 What is a forward price of an index JKL given the following information? Date of pricing: November 15, 2019 Time till expiration: four months / Contract expires on March 15, 2020 Current value of an index: 2 803 Continuously compounded interest rate: 4.5 % Continuously compounded dividend yield: 2.3% PROBLEM №2 What is the value of the forward contract (specified in problem №1) on January 15, 2020 if: Forward price of contract with the same underlying...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT