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3. Make or Buy. A sudden increase in the demand for smoke detectors has left Acme Alarms with insufficient capacity to meet demand. The company has seen monthly demand from its retailers for its electronic and battery-operated detectors rise to 20,000 and 10,000, respectively. Acme's production process involves three departments: fabrication, assembly, and shipping. The relevant quantitative data on production and prices are summarized as follows: Department Monthly Hours Available Hours/Unit (Electronic) Hours/Unit (Battery) Fabrication 2,000 4,200 2,500 Assembly Shipping Variable cost/unit Retail price 0.15 0.20 0.10 $18.80 $29.50 0.10 0.20 0.15 $16.00 $28.00 The company also has the option to obtain additional units from a subcontractor, who has offered to supply up to 20,000 units per month in any combination of electric and battery-operated models, at a charge of $21.50 per unit. For this price, the subcontractor will test and ship its models directly to the retailers without using Acme's production process. a. What are the maximum profit and the corresponding make/buy levels? (Fractional decisions are acceptable.) b. Suppose that Acme requires that the solution provided by the model be implementable without any rounding off. That is, the solution must contain integer decisions. What are the optimal make/buy levels? c. Is the solution in part (b) a rounded-off version of the fractional solution in part (a)? oach investment

3. Make or Buy. A sudden increase in the demand for smoke detectors has left Acme Alarms with insufficient capacity to meet demand. The company has seen monthly demand from its retailers for its electronic and battery-operated detectors rise to 20,000 and 10,000, respectively. Acme's production process involves three departments: fabrication, assembly, and shipping. The relevant quantitative data on production and prices are summarized as follows: Department Monthly Hours Available Hours/Unit (Electronic) Hours/Unit (Battery) Fabrication 2,000 4,200 2,500 Assembly Shipping Variable cost/unit Retail price 0.15 0.20 0.10 $18.80 $29.50 0.10 0.20 0.15 $16.00 $28.00 The company also has the option to obtain additional units from a subcontractor, who has offered to supply up to 20,000 units per month in any combination of electric and battery-operated models, at a charge of $21.50 per unit. For this price, the subcontractor will test and ship its models directly to the retailers without using Acme's production process. a. What are the maximum profit and the corresponding make/buy levels? (Fractional decisions are acceptable.) b. Suppose that Acme requires that the solution provided by the model be implementable without any rounding off. That is, the solution must contain integer decisions. What are the optimal make/buy levels? c. Is the solution in part (b) a rounded-off version of the fractional solution in part (a)? oach investment

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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rt 1... nneth R..... 276 308 334 55 81 33 I would be the optimal purchasing plan? c. Suppose that, in addition to the augmented operating cost of $24 million, the uniformity policy required a minimum of only 8 airplanes of the same type rather than 10 as at present. What would be the optimal purchasing plan under these assumptions? Assembly Shipping Variable cost/unit Retail price 3. Make or Buy. A sudden increase in the demand for smoke detectors has left Acme Alarms with insufficient capacity to meet demand. The company has seen monthly demand from its retailers for its electronic and battery-operated detectors rise to 20,000 and 10,000, respectively. Acme's production process involves three departments: fabrication, assembly, and shipping. The relevant quantitative data on production and prices are summarized as follows: Department Monthly Hours Available Hours/Unit (Electronic) Hours/Unit (Battery) Fabrication 2,000 4,200 2,500 0.15 0.20 0.10 $18.80 $29.50 0.10 0.20 0.15 $16.00 $28.00 5 AA c. Is the solution in part (b) a rounded-off version of the fractional solution in part (a)? The company also has the option to obtain additional units from a subcontractor, who has offered to supply up to 20,000 units per month in any combination of electric and battery-operated models, at a charge of $21.50 per unit. For this price, the subcontractor will test and ship its models directly to the retailers without using Acme's production process. a. What are the maximum profit and the corresponding make/buy levels? (Fractional decisions are acceptable.) b. Suppose that Acme requires that the solution provided by the model be implementable without any rounding off. That is, the solution must contain integer decisions. What are the optimal make/buy levels? Choice Perry Enterprises is considering a number of investment possibilities. Specifically, each investment
Transcribed Image Text:rt 1... nneth R..... 276 308 334 55 81 33 I would be the optimal purchasing plan? c. Suppose that, in addition to the augmented operating cost of $24 million, the uniformity policy required a minimum of only 8 airplanes of the same type rather than 10 as at present. What would be the optimal purchasing plan under these assumptions? Assembly Shipping Variable cost/unit Retail price 3. Make or Buy. A sudden increase in the demand for smoke detectors has left Acme Alarms with insufficient capacity to meet demand. The company has seen monthly demand from its retailers for its electronic and battery-operated detectors rise to 20,000 and 10,000, respectively. Acme's production process involves three departments: fabrication, assembly, and shipping. The relevant quantitative data on production and prices are summarized as follows: Department Monthly Hours Available Hours/Unit (Electronic) Hours/Unit (Battery) Fabrication 2,000 4,200 2,500 0.15 0.20 0.10 $18.80 $29.50 0.10 0.20 0.15 $16.00 $28.00 5 AA c. Is the solution in part (b) a rounded-off version of the fractional solution in part (a)? The company also has the option to obtain additional units from a subcontractor, who has offered to supply up to 20,000 units per month in any combination of electric and battery-operated models, at a charge of $21.50 per unit. For this price, the subcontractor will test and ship its models directly to the retailers without using Acme's production process. a. What are the maximum profit and the corresponding make/buy levels? (Fractional decisions are acceptable.) b. Suppose that Acme requires that the solution provided by the model be implementable without any rounding off. That is, the solution must contain integer decisions. What are the optimal make/buy levels? Choice Perry Enterprises is considering a number of investment possibilities. Specifically, each investment
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