Consider the Scenario Given Below

question 12

Multiple Choice

Consider the scenario given below.Use Excel solver to answer the following question(s) .
Peca Inc.is a small manufacturer of two types of office chairs,the swivel and no-swivel models.The manufacturing process consists of two principal departments: fabrication and finishing.The fabrication department has 24 skilled workers,each of whom works 7 hours per day.The finishing department has 6 workers,who also work a 7-hour shift.A swivel type requires 7 labor hours in the fabricating department and 2 labor hours in finishing.The no-swivel model requires 8 labor hours in fabricating and 3 labor hours in finishing.Peca Inc.makes a net profit of $100 on the swivel model,and $130 on the no-swivel model.The company anticipates selling at least twice as many no-swivel models as swivel models.The company wants to determine how many of each model should be produced on a daily basis to maximize net profit.
-What is the allowable decrease per unit of swivel chair produced?

• A)$120.75
• B)$42
• C)$47.25
• D)$13.33

---

Definitions:

Equilibrium Price

The cost at which the amount of a product or service that consumers want to buy is equal to the amount that sellers want to sell, resulting in a balanced market.

Shortages

The situation where the demand for a product or service exceeds its supply in a market.

Price Ceiling

A government-imposed limit on the price charged for a product or service, intended to prevent prices from becoming too high.

Surplus

An amount of something left over when requirements have been met; in economic terms, this can refer to excess supply over demand in a market, leading to lower prices.