For a Maximization Problem, Assume That a Constraint Is Binding

question 37

Multiple Choice

For a maximization problem, assume that a constraint is binding. If the original amount of a resource is 4 lbs. and the range of feasibility (sensitivity range) for this constraint is from 3 lbs. to 6 lbs., increasing the amount of this resource by 1 lb. will result in the

• A) same product mix, different total profit.
• B) different product mix, same total profit as before.
• C) same product mix, same total profit.
• D) different product mix, different total profit.

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Definitions:

Scrap Value

The estimated resale value of an asset at the end of its useful life, typically in a condition where it can only be sold for parts or raw materials.

Probabilities

The measure of the likelihood that an event will occur, expressed as a number between 0 and 1.

Coin Toss

A simple randomness procedure used to decide between two equally probable outcomes with the flip of a coin.

Expected Value

The predicted value of a variable, calculated as the sum of all possible values each multiplied by the probability of its occurrence.