LINDO Output Is Given for the Following Linear Programming Problem

question 29

Essay

LINDO output is given for the following linear programming problem.
MIN 12 X1 + 10 X2 + 9 X3
SUBJECT TO
2) 5 X1 + 8 X2 + 5 X3 >= 60
3) 8 X1 + 10 X2 + 5 X3 >= 80
END
LP OPTIMUM FOUND AT STEP 1
OBJECTIVE FUNCTION VALUE
1) 80.000000 NO. ITERATIONS= 1
RANGES IN WHICH THE BASIS IS UNCHANGED:
a.What is the solution to the problem?
b.Which constraints are binding?
c.Interpret the reduced cost for x₁.
d.Interpret the dual price for constraint 2.
e.What would happen if the cost of x₁ dropped to 10 and the cost of x₂ increased to 12?

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Definitions:

Contribution Format

A method of profit reporting that separates fixed and variable costs, highlighting the contribution margin of products, services, or business segments.

Variable Costing

A technique in managerial accounting where only variable production costs are charged to product units, differentiating it from absorption costing by not including fixed overhead.

Absorption Costing

A cost accounting method that includes all manufacturing costs, including both fixed and variable, in the cost of a product.

Contribution Format

A type of income statement layout that separates variable costs from fixed costs, highlighting the contribution margin.