Data Equipment Inc

question 8

Essay

Data Equipment Inc.produces two models of a retail price scanner,a sophisticated model that can be networked to a central processing unit and a stand-alone model for small retailers.The major limitations of the manufacturing of these two products are labor and material capacities.The following table summarizes the usages and capacities associated with each product. The typical LP formulation for this problem is:
Maximize P = $160 X₁ + $95 X₂
Subject to: 8 X₁ + 5 X₂ ≤ 800
20 X₁ + 7 X₂ ≤ 1500
X₁,X₂ ≥ 0
However,the management of DEI has prioritized several goals that are to be attained by manufacturing:
(1)Management had decided to severely limit overtime.
(2)Management has established a profit goal of $15,000 per day.
(3)Due to the difficulty of obtaining components from non-routine suppliers,management wants to end production with at least 50 units of each component remaining in stock.
(4)Management also believes that they should produce at least 30 units of the network model.
Given the above additional information,set this up as a goal programming problem.

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Definitions:

Unit Sales

The total number of individual items or units that a company sells during a certain period.

Contribution Margin Ratio

The contribution margin ratio is the ratio of the contribution margin (sales minus variable costs) to sales revenue, indicating the percentage of each sales dollar available to cover fixed costs and provide profit.

Fixed Monthly Expenses

Costs that do not vary from month to month, such as rent, loan payments, and insurance premiums.

Contribution Format Income Statement

An income statement format that separates fixed and variable costs to highlight the contribution margin of a business.