Farm Foods Company, produces two types of pork loins . Each type of loin consists of white meat and dark meat. Loin 1 sells for $4 per pound and must consist of at least 70% white meat. Loin 2 sells for $3 per pound and must consist of at least 60% white meat. At most 6000 pounds of Loin 1 and 2000 pounds of Loin 2 can be sold. The two types of pork used to manufacture the loins are purchased from a pork farm. Each type 1 pig costs $10 and yields 5 pounds of white meat and 2 pounds of dark meat. Each type 2 pig costs $8 and yields 3 pounds of white meat and 3 pounds of dark meat. Determine the profit maximizing strategy for Farm Foods. [That is, what is the optimal number pigs to purchase and how many of each type of loins should be sold. Assume that fractional pigs can be purchased – that is, do not model any integer variables] Using Sensitivity Analysis, determine the increase in profitability if the demand for loin 1 increases by 500 additional pounds (from 6000 to 6500).

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Farm Foods Company, produces two types of pork loins . Each type of loin consists of white meat and dark meat. Loin 1 sells for $4 per pound and must consist of at least 70% white meat. Loin 2 sells for $3 per pound and must consist of at least 60% white meat. At most 6000 pounds of Loin 1 and 2000 pounds of Loin 2 can be sold. The two types of pork used to manufacture the loins are purchased from a pork farm. Each type 1 pig costs $10 and yields 5 pounds of white meat and 2 pounds of dark meat. Each type 2 pig costs $8 and yields 3 pounds of white meat and 3 pounds of dark meat.

  1. Determine the profit maximizing strategy for Farm Foods. [That is, what is the optimal number pigs to purchase and how many of each type of loins should be sold. Assume that fractional pigs can be purchased – that is, do not model any integer variables]

  2. Using Sensitivity Analysis, determine the increase in profitability if the demand for loin 1 increases by 500 additional pounds (from 6000 to 6500).

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