A Chocolate Making Company Largely Produces One Particular Type of Crunchy

question 59

Essay

A chocolate making company largely produces one particular type of crunchy chocolate bar. There are two machines in the plant that produces this chocolate bar. The maintenance costs per day incurred on these two machines are $100 and $120, respectively. The manufacturing cost per chocolate bar is $2.5 for Machine-1 and $2 for Machine-2. The maximum daily production capacity for Machine-1 and Machine-2 are 1100 and 1250, respectively, and the company must produce at least 1000 chocolate bars per day. Develop and solve an integer programming model for minimizing the total cost.

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Definitions:

Flexible Budget

A dynamic budget that changes according to the business activity levels, offering a more adaptable financial planning tool.

Level of Activity

A measure of the volume of production or operations, often influencing cost behavior and used to allocate fixed costs to units of product.

Revenue Variance

The difference between the actual revenue earned and the budgeted or expected revenue.

Static Planning Budget

A budget based on a single level of output, not adjusted for changes in activity levels.