Competency 309.3.1: Decision-Making Models – The graduate uses optimizing models and other models as aids for making more informed decisions.
Objective 309.3.1-03: Interpret the solution depicted by a graphical linear programming model.
Objective 309.3.1-11: Interpret the constraints depicted on a graphical linear programming model.
Objective 309.3.1-12: Interpret the objective function depicted on a graphical linear programming model.
Objective 309.3.1-11: Interpret the constraints depicted on a graphical linear programming model.
Objective 309.3.1-12: Interpret the objective function depicted on a graphical linear programming model.
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Introduction:
Graphical models enable a manager to visualize the objective function (profit line), constraints, and possible solutions to a given problem, and to make more informed decisions based on that information.
Given:
Company A produces and sells a popular pet food product packaged under two brand names, with formulas that contain different proportions of the same ingredients. Company A made this decision so that their national branded product would be differentiated from the private label product. Some product is sold under the company’s nationally advertised brand (Brand X), while the re-proportioned formula is packaged under a private label (Brand Y) and is sold to chain stores.
Because of volume discounts and other stipulations in the sales agreements, the contribution to profit from the Brand Y private label product is only $35 per case compared to $50 per case for product sold to distributors under the company’s Brand X national brand.
An ample supply is available of most of the pet food ingredients; however, three additives are in limited supply. The tight supply of nutrient C (one of several nutrient additives), a flavor additive, and a color additive all limit production of both Brand X and Brand Y.
The formula for a case of Brand X calls for 5 units of nutrient C, 10 units of flavor additive, and 8 units of color additive. The Brand Y formula per case requires 4 units of nutrient C, 5 units of flavor additive, and 14 units of color additive. The supply of the three ingredients for each production period is limited to 33 units of nutrient C, 60 units of flavor additive, and 95 units of color additive.
Introduction:
Graphical models enable a manager to visualize the objective function (profit line), constraints, and possible solutions to a given problem, and to make more informed decisions based on that information.
Given:
Company A produces and sells a popular pet food product packaged under two brand names, with formulas that contain different proportions of the same ingredients. Company A made this decision so that their national branded product would be differentiated from the private label product. Some product is sold under the company’s nationally advertised brand (Brand X), while the re-proportioned formula is packaged under a private label (Brand Y) and is sold to chain stores.
Because of volume discounts and other stipulations in the sales agreements, the contribution to profit from the Brand Y private label product is only $35 per case compared to $50 per case for product sold to distributors under the company’s Brand X national brand.
An ample supply is available of most of the pet food ingredients; however, three additives are in limited supply. The tight supply of nutrient C (one of several nutrient additives), a flavor additive, and a color additive all limit production of both Brand X and Brand Y.
The formula for a case of Brand X calls for 5 units of nutrient C, 10 units of flavor additive, and 8 units of color additive. The Brand Y formula per case requires 4 units of nutrient C, 5 units of flavor additive, and 14 units of color additive. The supply of the three ingredients for each production period is limited to 33 units of nutrient C, 60 units of flavor additive, and 95 units of color additive.
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Task:
A. Determine the equations for each of the three constraints that are plotted on “Graph 1,” (see below) showing all work necessary to arrive at the equations.
1. Identify each constraint as a minimum or a maximum constraint.
B. Determine the profit if the company produces a combination of cases of Brand X and Brand Y that lies on the purple objective function (profit line) as it is plotted on “Graph 1.” (see below)
C. Determine how many cases each of Brand X and of Brand Y you recommend should be produced during each production period for optimum production if Company A wants to generate the greatest amount of profit, showing all of your work.
D. Determine the total contribution to profit that would be generated by the production level you recommend in part C, showing all of your work.
E. If you use sources, include all in-text citations and references in APA format.
Task:
A. Determine the equations for each of the three constraints that are plotted on “Graph 1,” (see below) showing all work necessary to arrive at the equations.
1. Identify each constraint as a minimum or a maximum constraint.
B. Determine the profit if the company produces a combination of cases of Brand X and Brand Y that lies on the purple objective function (profit line) as it is plotted on “Graph 1.” (see below)
C. Determine how many cases each of Brand X and of Brand Y you recommend should be produced during each production period for optimum production if Company A wants to generate the greatest amount of profit, showing all of your work.
D. Determine the total contribution to profit that would be generated by the production level you recommend in part C, showing all of your work.
E. If you use sources, include all in-text citations and references in APA format.
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