Use the Following Information to Answer the Question(s) Below -If a Model Has Alternative Optimal Solutions

question 10

Multiple Choice

Use the following information to answer the question(s) below.
Cerebro Manufacturing produces four types of structural support fittings-plugs, rails, rivets, and clips-which are machined on two CNC machining centers. The machining centers have a capacity of 250,000 minutes per year. The gross margin per unit and machining requirements are shown in the spreadsheet below. $\begin{array}{|l|l|l|l|l|l|l|}\hline&{\text { A }} & \text { B } & \text { C } & \text { D } & \text { E } & \text { F } \\\hline& \text { Cerebro } && & & & \\1&\text { ManufacturingModel } & & & & & \\\hline 2\\\hline 3 & \text { Product } & \text { Plugs } & \text { Rails } & \text { Rivets } & \text { Clips }& \begin{array}{l}\text { Machine } \\\text { Capacity } \\\text { (mins./year) }\end{array} \\\hline 4 & \text { Gross margin/unit } & \$ 0.40 & \$ 1.20 & \$ 0.80 & \$ 1.10 & \\\hline 5 & \text { Minutes/unit } & 1 & 2 & 3 & 1.5 & 250,000 \\\hline 6 & \text { Gross margin/minute } & \\\hline 7 & \text { Maximum production } & \\\hline 8 & \text { Profit } & \\\hline\end{array}$
-If a model has alternative optimal solutions, .

• A) the objective is maximized or minimized by more than one combination of decision variables
• B) there is no solution that simultaneously satisfies all the constraints
• C) the objective can be increased or decreased to infinity or negative infinity
• D) there is exactly one solution that will result in the maximum or minimum objective

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Definitions:

Term Lending Agreement

A contractual agreement between a borrower and a lender that stipulates the terms and conditions under which a loan will be advanced and repaid over a specific period.

Original Maturity

The original duration set during the issuance of a financial instrument, such as a bond or loan, indicating the period until the principal is supposed to be paid back.

GAAP

The standardized set of accounting principles, standards, and procedures issued by the Financial Accounting Standards Board (FASB) for companies in the U.S.

Fair Value

The income from offloading an asset or the charge for transferring a liability in a methodical exchange among participants in the market at the time of determining its value.