Let,

X= No. of model 101 produced

Y= No. of model 102 produced

The linear formation will be

Objective :
Max 3000 X + 5000 Y
Subjected to:
1X+ 2Y 4000, Engine assembly
2X + 2Y 6000, Metal stamping
2X

5000, Model 101 assembly

3Y

4500, Model 102 assembly

>= 0, non negativity

>= 0, non negativity

1. (a)
Total_pro
fit
2400000

X
Per_Unit_profit
Fixed_Overhead
Engine_assembly
Metal_Stamping
Model_101_assse
mbly
Model_102_Asse
mbly
Model_101
Model102

Y
2000
1000
3000
5000
86000
00
1
2

2
2

4000 <=
6000 <=

4000
6000

4000 <=

5000

0
1
0

3
0
1

3000 <=
2000 >=
1000 >=

4500
0
0

Thus, Best product mix would be :Model 101 = 2000

Model 102 = 1000
1.(b)
X
Per_Unit_profit
Fixed_Overhead

Y
1999
1001
3000
5000
86000
00

Engine_assembly
Metal_Stamping
Model_101_assse
mbly
Model_102_Asse
mbly
Model_101
Model102

1
2

2
2

4001
6000

3998

0
1
0

3
0
1

3003
1999
1001

Best product mix when capacity were raised increased is: - Model 101 = 1999
Model 102 = 1001
Constraints

Cell
$D$1
3
$D$1
4

Model 101 LHS

Model 102 LHS

Fina
l
Valu
e
200
0
100
0

$D$
9

Engine
assembly LHS

400
0

$D$1
0
$D$1
1
$D$1
2

Metal Stamping
LHS
M101 Assembly
LHS
M102 Assembly
LHS

Name

600
0
400
0
300
0

Shad
ow

Constra
int
R.H.
Side

Allowa
ble
Increas
e

Allowa
ble
Decrea
se

2000

1E+30

1000

1E+30

2000

4000

500

500

500

6000

500

1000

5000

1E+30

1000

4500

1E+30

1500

Price

Extra unit of capacity is worth 2000

1.(c)
Per_Unit_profit
Fixed_overhead

X
1900
3000
86000
00

Y
1100
5000

Totalpro Extra_unit_wo
fit
rth
260000
2000
0

Engine_assembly
Metal_Stamping
Model_101_assse
mbly
Model_102_Asse
mbly
Model_101
Model102
Contribution in part b = 2000

1
2

2
2

4100 <=
6000 <=

4100
6000

3800 <=

5000

0
1
0

3
0
1

3300 <=
1900 >=
1100 >=

4500
0
0

Contribution when capacity is increased from 4001 to 4100 = 200000

Therefore Contribution in profit is increasing at a rate of 2000 per unit machine hour of engine
assembly.

1.(d)

Cell
$D$1
3
$D$1
4

Model 101 LHS

Model 102 LHS

Fina
l
Val
ue
150
0
150
0

$D$
9

Engine
assembly LHS

450
0

$D$1
0
$D$1
1
$D$1
2

Metal Stamping
LHS
M101 Assembly
LHS
M102 Assembly
LHS

Name

600
0
300
0
450
0

Constra
int
R.H.
Side

Allowa
ble
Increas
e

Allowa
ble
Decrea
se

1500

1E+30

1500

1E+30

4600

1E+30

100

1500

6000

200

3000

0
666.66666
67

5000

1E+30

2000

4500

300

3000

Shadow
Price

500 units of engine capacity can be added before it capacity worth changes.
Shadow price becomes 0.

Q2. Production manager is talking about reimbursing the outside supplier

for materials, labor and overhead. But Fixed overheads are based on

Mertons infrastructure and do not hold for the outside supplier. Only the
variable overheads are relevant here.
The MAXIMUM rent it can pay is $2000 and no more than 500 hours of
engine assembly can be purchased

Q3. Engine assembly MACHINE HOURS =4000/5000=0.8

Metal stamping

MACHINE HOURS= 6000/4000 = 1.5

Decisions variables:
X= number of model 101 trucks produced,
Y= number of model 102 trucks produced,
Z= number of model 103 trucks produced
Objective : max 3000X + 5000Y + 2000Z

Constraint :
Engine assembly 1X + 2Y+ 0.8Z 4000,
Metal stamping 2X + 2Y + 1.5Z 6000,
2X +

1Z

5000, Model 101 assembly

3Y

4500, Model 102 assembly

>= 0, non negativity

>= 0, non negativity

>= 0, non negativity.

X

Profit_Per_Unit
Fixed_overhead

2000
3000
86000
00

Z
1000
5000

2000

Total_Pro
fit
2400000

Engine_assembly
Metal_Stamping
Model_101_assse
mbly
Model_102_Asse
mbly
Model101
Model102
Model103

1
2

2
2

0.8
1.5

4000 <=
6000 <=

4000
6000

4000 <=

5000

0
1
0
0

3
0
1
0

0
0
0
1

3000
2000
1000
0

4500
0
0
0

<=
>=
>=
>=

(a) No Merton should not produce 103 truck because its contribution to profit is not
enough.
(b) The worth of contribution of 103 truck model for profit should be at least
2000+350=2350

Cel
l
$B$
2
$C$
2
$D
$2

Redu
ced

Fin
al
Val
ue
200
0
100
0

Name
X

Objecti
ve
Coeffici
ent

Allowab
le
Increas
e

Allowa
ble
Decrea
se

3000

2000

500

5000

1000

2000

2000

350

1E+30

Cost

Q.4 The Company should not go for overtime because its profit decreases from 2400000 to
2350000.
X1= No of 101 truck produced in over time
Y1=No of 102 truck produce in over time

No_of_Units
Contribution
Fixed_Overhead

X1

Y1

1000
3000
93500
00

1500
5000

500
2400

0
3800

Profit
23500
00

LHS

Relati

RHS

Engine_assembly
Over_time_work
Metal_Stamping
Model_101_assse
mbly
Model_102_Asse
mbly
Model_101
Model102
Extra_101
Extra_102

1
0
2

2
0
2

0
1
2

0
2
2

4000
500
6000

on
<=
<=
<=

4000
2000
6000

3000

<=

5000

0
1
0
0
0

3
0
1
0
0

0
0
0
1
0

3
0
0
0
1

4500
1000
1500
500
0

<=
>=
>=
>=
>=

4500
0
0
0
0

Q.5
The number of 101 model truck is 3 times of 102 model truck, So X=3Y
X-3Y = 0, which is additional constraint.

Per_Unit_profit
Fixed_Overhead
Engine_assembly
Metal_Stamping
Model_101_assse
mbly
Relation
Model_102_Asse
mbly
Model_101
Model102

Total_pro
fit
1900000

2250

750

3000
86000
00

5000

1
2

2
2

3750
6000

<=
<=

4000
6000

2
1

0
-3

4500
0

<=
=

5000
0

0
1
0

3
0
1

2250
2250
750

<=
>=
>=

4500
0
0

The product mix will be,

No of 101 Truck, x=2250,
No of 102 Truck, y=750