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:

Quasi-Fixed Costs

Costs that are not strictly variable or fixed but have elements of both, changing with adjustments in the level of business activity or scale of operations over time.

Marginal Costs

The additional cost required to produce one more unit of a product, reflecting how total costs change with production volume.

Total Cost Function

An equation that expresses the total cost of producing a given quantity of output as the sum of all production costs.

Inverse Demand Function

A mathematical function that expresses the price of a good or service as a function of the quantity demanded, illustrating how price varies with changes in demand.