In a typical product mix model, where a companymust decide how much of each product to produceto maximize profit, there are sometimes customerdemands for the products. We used upper-boundconstraints for these: Don’t produce more than youcan sell. Would it be realistic to have lower-boundconstraints instead: Produce at least as much as isdemanded? Would it be realistic to have both (wherethe upper bounds are greater than the lower bounds)?Would it be realistic to have equality constraints:Produce exactly what is demanded?
In a typical product mix model, where a companymust decide how much of each product to produceto maximize profit, there are sometimes customerdemands for the products. We used upper-boundconstraints for these: Don’t produce more than youcan sell. Would it be realistic to have lower-boundconstraints instead: Produce at least as much as isdemanded? Would it be realistic to have both (wherethe upper bounds are greater than the lower bounds)?Would it be realistic to have equality constraints:Produce exactly what is demanded?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
In a typical product mix model, where a company
must decide how much of each product to produce
to maximize profit, there are sometimes customer
demands for the products. We used upper-bound
constraints for these: Don’t produce more than you
can sell. Would it be realistic to have lower-bound
constraints instead: Produce at least as much as is
the upper bounds are greater than the lower bounds)?
Would it be realistic to have equality constraints:
Produce exactly what is demanded?
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