Q3. La Jolla Beverage Products is considering producing a wine cooler that would be a blend of a white wine, a rose wine and fruit juice. To meet taste specifications, the wine cooler must consist of at least 20% white wine, at least 50% and no more than 60% rose, and exactly 10% fruit juice. La Jolla purchases the wine from local wineries and the fruit juice from a processing plant in San Francisco. For the current production period, 8,000 gallons of white wine and 7000 gallons of rose wine can be purchased; an unlimited amount of fruit juice can be ordered. The costs for the wine are $1 per gallon for the white and $2 per gallon for the rose; the fruit juice can be purchased for $0.50 per gallon. La Jolla Beverage Products can sell all of the wine cooler they can produce for $4 per gallon. a. Is the cost of the wine and fruit juice a sunk cost or a relevant cost in this situation? Explain. b. Formulate a linear program to determine the blend of the three ingredients that will maximize the total profit. Solve the linear program to determine the number of gallons of each ingredient La Jolla should purchase and the total profit contribution they will realize from this blend. Note: You shall use a software, either Management Scientist or Excel Solver, to solve this problem. Attach the software model and output (Answer and Sensitivity Analysis) to your homework submission. c. If La Jolla could obtain additional amounts of the white wine, should they do so? If so, how much should they be willing to pay for each additional gallon, and how many additional gallons would they want to purchase?

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OPIM101 Homework Wk02 Aug X
*Biz Law (Q1).pdf
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Q3.
La Jolla Beverage Products is considering producing a wine cooler that would be a blend of a white
wine, a rose wine and fruit juice. To meet taste specifications, the wine cooler must consist of at least
20% white wine, at least 50% and no more than 60% rose, and exactly 10% fruit juice. La Jolla
purchases the wine from local wineries and the fruit juice from a processing plant in San Francisco. For
the current production period, 8,000 gallons of white wine and 7000 gallons of rose wine can be
purchased; an unlimited amount of fruit juice can be ordered. The costs for the wine are $1 per gallon
for the white and $2 per gallon for the rose; the fruit juice can be purchased for $0.50 per gallon. La
Jolla Beverage Products can sell all of the wine cooler they can produce for $4 per gallon.
Is the cost of the wine and fruit juice a sunk cost or a relevant cost in this situation? Explain.
b. Formulate a linear program to determine the blend of the three ingredients that will maximize
the total profit. Solve the linear program to determine the number of gallons of each ingredient
La Jolla should purchase and the total profit contribution they will realize from this blend.
а.
Note: You shall use a software, either Management Scientist or Excel Solver, to solve this
problem. Attach the software model and output (Answer and Sensitivity Analysis) to your
homework submission.
If La Jolla could obtain additional amounts of the white wine, should they do so? If so,
much should they be willing to pay for each additional gallon, and how
would they want to purchase?
с.
how
many
additional gallons
12:21 AM
O Type here to search
^ 4) C
26°C
ENG
9/3/2021
Transcribed Image Text:OPIM101 Homework Wk02 Aug X *Biz Law (Q1).pdf Biz Law (Q1).pdf PDF File | C:/Users/Owner/OneDrive/Documents/SMU/OPIM/OPIM101%20Homework%20WK02%20Aug%2021.pdf Not syncing Would you like to set Microsoft Edge as your default browser? Set as default (D Page view A Read aloud V Draw E Highlight 2 of 2 Erase 50000.000 No Upper Limit 1 45900.000 30000.000 90000.000 100512.821 3 38571.429 120000.000 165555.556 Q3. La Jolla Beverage Products is considering producing a wine cooler that would be a blend of a white wine, a rose wine and fruit juice. To meet taste specifications, the wine cooler must consist of at least 20% white wine, at least 50% and no more than 60% rose, and exactly 10% fruit juice. La Jolla purchases the wine from local wineries and the fruit juice from a processing plant in San Francisco. For the current production period, 8,000 gallons of white wine and 7000 gallons of rose wine can be purchased; an unlimited amount of fruit juice can be ordered. The costs for the wine are $1 per gallon for the white and $2 per gallon for the rose; the fruit juice can be purchased for $0.50 per gallon. La Jolla Beverage Products can sell all of the wine cooler they can produce for $4 per gallon. Is the cost of the wine and fruit juice a sunk cost or a relevant cost in this situation? Explain. b. Formulate a linear program to determine the blend of the three ingredients that will maximize the total profit. Solve the linear program to determine the number of gallons of each ingredient La Jolla should purchase and the total profit contribution they will realize from this blend. а. Note: You shall use a software, either Management Scientist or Excel Solver, to solve this problem. Attach the software model and output (Answer and Sensitivity Analysis) to your homework submission. If La Jolla could obtain additional amounts of the white wine, should they do so? If so, much should they be willing to pay for each additional gallon, and how would they want to purchase? с. how many additional gallons 12:21 AM O Type here to search ^ 4) C 26°C ENG 9/3/2021
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