A company manufactures two products A and B. Each unit of A requires 4 labour hours of processing and each unit of B requires 2 labour hours of processing. Demand for these two products per month is 7 and 10 units respectively Profit Per unit is Rs. 400 and Rs. 200 respectively. Determine the best combination of A and B to be produced. Total labour hours available per month is 32. There is additional cost of Rs. 200 per overtime labour hours and Rs. 175 cost of underutilised labour hours. A cost of Rs. 250 is assessed for any shortfall in meeting demand.

A company manufactures two products A and B. Each unit of A requires 4 labour hours of processing and each unit of B requires 2 labour hours of processing. Demand for these two products per month is 7 and 10 units respectively Profit Per unit is Rs. 400 and Rs. 200 respectively. Determine the best combination of A and B to be produced. Total labour hours available per month is 32. There is additional cost of Rs. 200 per overtime labour hours and Rs. 175 cost of underutilised labour hours. A cost of Rs. 250 is assessed for any shortfall in meeting demand.

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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Concept explainers

Optimization Models

Optimization models are mathematical models that help organizations determine the best way to allocate scarce resources to achieve specific objectives. These models can be used to solve a wide variety of problems, from finding the most efficient route for a delivery truck to determining the optimal mix of products to stock in a store.

Question

2. A company manufactures two products A and B. Each unit of A requires 4 labour hours of
processing and each unit of B requires 2 labour hours of processing. Demand for these two
products per month is 7 and 10 units respectively Profit Per unit is Rs. 400 and Rs. 200
respectively. Determine the best combination of A and B to be produced. Total labour hours
available per month is 32. There is additional cost of Rs. 200 per overtime labour hours and
Rs. 175 cost of underutilised labour hours. A cost of Rs. 250 is assessed for any shortfall
in meeting demand.
The company has established the following goals and has assigned three priorities P1, P2,
P3, P4 and P5, where P1 is of highest priority.
P1: Maximise Total profit
P2: Avoid underutilisation of labour
P3: Meet Demand for Product A
P4: Meet Demand for Product B
P5: Do not use any overtime

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