Consider the Following Linear Program, Which Maximizes Profit for Two

question 85

Short Answer

Consider the following linear program, which maximizes profit for two products--regular (R) and super (S):
MAX 50R + 75S
s.t.
   1.2 R + 1.6 S ? 600 assembly (hours)
   0.8 R + 0.5 S ? 300 paint (hours)
.   16 R + 0.4 S ? 100 inspection (hours)
Sensitivity Report:
$\begin{array}{ccccccc}\text { Cell } & \text { Name } & \begin{array}{c}\text { Final } \\\text { Value }\end{array} & \begin{array}{c}\text { Reduced } \\\text { Cost }\end{array} & \begin{array}{c}\text { Objective } \\\text { Coefficient }\end{array} & \begin{array}{c}\text { Allowable } \\\text { Increase }\end{array} & \begin{array}{c}\text { Allowable } \\\text { Decrease }\end{array} \\\hline \$ \mathrm{~B} \$ 7 & \text { Regular }= & 291.67 & 0.00 & 50 & 70 & 20 \\\hline \text { \$C } \$ 7 & \text { Super }= & 133.33 & 0.00 & 75 & 50 & 43.75 \\\hline\end{array}$



$\begin{array}{llrccc}\text { Cell } \quad \text { Name } & \begin{array}{c}\text { Final } \\\text { Value }\end{array} & \begin{array}{c}\text { Shadow } \\\text { Price }\end{array} & \begin{array}{c}\text { Constraint } \\\text { R.H. Side }\end{array} & \begin{array}{c}\text { Allowable } \\\text { Increase }\end{array} & \begin{array}{c}\text { Allowable } \\\text { Decrease }\end{array} \\\hline \$ \mathrm{E} \$ 3 \text { Assembly (hr/unit) } & 563.33 & 0.0 \mathrm{C} & 600 & 1 \$\mathrm{E}+30 & 36.67 \\\hline \$\mathrm{E} \$ 4 \text { Paint (hr/unit) } & 300.00 & 33.33 & 300 & 39.29 & 175 \\\hline \$\mathrm{E} \$ 5 \text { Inspect (hr/unit) } & 100.00 & 145.83 & 100 & 12.94 & 40\end{array}$
-A change in the market has increased the profit on the super product by $5. Total profit will increase by ________.

---

Definitions:

Maximize Revenue

Strategies and actions taken by businesses to increase the total income generated from sales, services, or other business activities.

Substitution Effect

A concept in economics where an increase in the price of a good leads to consumers replacing it with a cheaper alternative.

Consumer Behavior

The examination of how individuals, groups, or organizations choose, acquire, consume, and discard products, services, experiences, or ideas in order to fulfill their needs, and how these activities affect both the consumer and the broader community.

Price Skimming Strategy

A pricing approach where a firm charges the highest initial price customers will pay and then lowers it over time.