Here is a problem to challenge your intuition. In theoriginal Grand Prix example, reduce the capacity ofplant 2 to 300. Then the total capacity is equal to thetotal demand. Reoptimize the model. You should findthat the optimal solution uses all capacity and exactlymeets all demands with a total cost of $176,050. Nowincrease the capacity of plant 1 and the demand atregion 2 by 1 automobile each, and optimize again.What happens to the optimal total cost? How can youexplain this “more for less” paradox?
Here is a problem to challenge your intuition. In theoriginal Grand Prix example, reduce the capacity ofplant 2 to 300. Then the total capacity is equal to thetotal demand. Reoptimize the model. You should findthat the optimal solution uses all capacity and exactlymeets all demands with a total cost of $176,050. Nowincrease the capacity of plant 1 and the demand atregion 2 by 1 automobile each, and optimize again.What happens to the optimal total cost? How can youexplain this “more for less” paradox?
Principles Of Marketing
17th Edition
ISBN:9780134492513
Author:Kotler, Philip, Armstrong, Gary (gary M.)
Publisher:Kotler, Philip, Armstrong, Gary (gary M.)
Chapter1: Marketing: Creating Customer Value And Engagement
Section: Chapter Questions
Problem 1.1DQ
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Here is a problem to challenge your intuition. In the
original Grand Prix example, reduce the capacity of
plant 2 to 300. Then the total capacity is equal to the
total demand. Reoptimize the model. You should find
that the optimal solution uses all capacity and exactly
meets all demands with a total cost of $176,050. Now
increase the capacity of plant 1 and the demand at
region 2 by 1 automobile each, and optimize again.
What happens to the optimal total cost? How can you
explain this “more for less” paradox?
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