A brewery produces regular beer and a lower-carbohydrate "light" beer. Steady customers of the brewery buy 10 units of regular beer and 15 units of light beer monthly. While setting up the brewery to produce the beers, the management decides to produce extra beer, beyond that needed to satisfy customers. The cost per unit of regular beer is $29,000 and the cost per unit of light beer is $50,000. Every unit of regular beer brings in $200,000 in revenue, while every unit of light beer brings in $500,000 in revenue. The brewery needs at least $15,000,000 in revenue, and has determined that the total demand will be at least 48 units of beer. Complete parts (a) and (b). (a) How much of each type of beer should be made so as to minimize total production costs? units of light beer should be made, for a minimum total cost of S st of $ units of regular beer and (Type integers or decimals.) (b) Suppose the minimum revenue is increased to $15,700,000. Use shadow costs to calculate the total production cost. The shadow cost of production is $ The increased minimum revenue corresponds to a total production cost of $ (Type integers or decimals.)

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...
icon
Related questions
Question
A brewery produces regular beer and a lower-carbohydrate "light" beer. Steady customers of the brewery buy 10 units of regular beer and 15 units
of light beer monthly. While setting up the brewery to produce the beers, the management decides to produce extra beer, beyond that needed to
satisfy customers. The cost per unit of regular beer is $29,000 and the cost per unit of light beer is $50,000. Every unit of regular beer brings in
$200,000 in revenue, while every unit of light beer brings in $500,000 in revenue. The brewery needs at least $15,000,000 in revenue, and has
determined that the total demand will be at least 48 units of beer. Complete parts (a) and (b)
BELED
(a) How much of each type of beer should be made so as to minimize total production costs?
units of light beer should be made, for a minimum total cost of $
units of regular beer and
(Type integers or decimals.)
(b) Suppose the minimum revenue is increased to $15,700,000. Use shadow costs to calculate the total production cost.
The shadow cost of production is $ The increased minimum revenue corresponds to a total production cost of $
(Type integers or decimals.)
Transcribed Image Text:A brewery produces regular beer and a lower-carbohydrate "light" beer. Steady customers of the brewery buy 10 units of regular beer and 15 units of light beer monthly. While setting up the brewery to produce the beers, the management decides to produce extra beer, beyond that needed to satisfy customers. The cost per unit of regular beer is $29,000 and the cost per unit of light beer is $50,000. Every unit of regular beer brings in $200,000 in revenue, while every unit of light beer brings in $500,000 in revenue. The brewery needs at least $15,000,000 in revenue, and has determined that the total demand will be at least 48 units of beer. Complete parts (a) and (b) BELED (a) How much of each type of beer should be made so as to minimize total production costs? units of light beer should be made, for a minimum total cost of $ units of regular beer and (Type integers or decimals.) (b) Suppose the minimum revenue is increased to $15,700,000. Use shadow costs to calculate the total production cost. The shadow cost of production is $ The increased minimum revenue corresponds to a total production cost of $ (Type integers or decimals.)
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps with 4 images

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Practical Management Science
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Business in Action
Business in Action
Operations Management
ISBN:
9780135198100
Author:
BOVEE
Publisher:
PEARSON CO
Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.