Apply Linear Programming to This Problem

question 8

Multiple Choice

Apply linear programming to this problem.A one-airplane airline wants to determine the best mix of passengers to serve each day.Their airplane seats 25 people and flies 8 one-way segments per day.There are two types of passengers: first class (F) and coach (C) .The cost to serve each first class passenger is $15 per segment and the cost to serve each coach passenger is $10 per segment.The marketing objectives of the airplane owner are to carry at least 13 first class passenger-segments and 67 coach passenger-segments each day.In addition,in order to break even,they must at least carry a minimum of 110 total passenger segments each day.Which of the following is one of the constraints for this linear program?

• A)15 F + 10 C => 110
• B)1 F + 1 C => 80
• C)13 F + 67 C => 110
• D)1 F => 13
• E)13 F + 67 C =< (80/200)

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Definitions:

Economies of Scale

The cost advantages that a business can exploit by expanding their scale of production, leading to a lower cost per unit.

Diseconomies of Scale

Increased costs per unit that occur when a company grows too large, leading to inefficiencies.

Long-Run Average Cost Curve

A graphical representation showing the minimum cost per unit at which a firm can produce any given level of output in the long run when all inputs are variable.

Diseconomies of Scale

The phenomenon where, as a firm becomes too large, its costs per unit increase due to inefficiencies, leading to a decrease in overall productivity or cost-effectiveness.