Production Costs A brewery produces regular beer and a lower-carbohydrate “light” beer. Steady customers of the brewery buy 10 units of regular beer and 15 units of light beer monthly. While selling up the brewery to produce the beers, the management decides to produce extra beer, beyond that needed to satisfy customers. The cost per unit of regular beer is $32,000 and the cost per unit of light beer is $50,000. Every unit of regular beer brings in $120,000 in revenue, while every unit of light beer brings in $300,000 in revenue. The brewery wants at least $9,000,000 in revenue. At least 20 additional units of beer can be sold.
(a) How much of each type of beer should be made so as to minimize total production costs?
(b) Suppose the minimum revenue is increased to $9,500,000. Use shadow costs to calculate the total production costs.
Want to see the full answer?
Check out a sample textbook solutionChapter 4 Solutions
Finite Mathematics (11th Edition)
Additional Math Textbook Solutions
Probability and Statistics for Engineers and Scientists
Numerical Analysis
Using & Understanding Mathematics: A Quantitative Reasoning Approach (7th Edition)
Mathematical Methods in the Physical Sciences
Thinking Mathematically (6th Edition)
Discrete Mathematics with Graph Theory (Classic Version) (3rd Edition) (Pearson Modern Classics for Advanced Mathematics Series)
- Linear Algebra: A Modern IntroductionAlgebraISBN:9781285463247Author:David PoolePublisher:Cengage LearningAlgebra & Trigonometry with Analytic GeometryAlgebraISBN:9781133382119Author:SwokowskiPublisher:CengageCollege Algebra (MindTap Course List)AlgebraISBN:9781305652231Author:R. David Gustafson, Jeff HughesPublisher:Cengage Learning
- Algebra and Trigonometry (MindTap Course List)AlgebraISBN:9781305071742Author:James Stewart, Lothar Redlin, Saleem WatsonPublisher:Cengage LearningCollege AlgebraAlgebraISBN:9781305115545Author:James Stewart, Lothar Redlin, Saleem WatsonPublisher:Cengage Learning