Perth Mining Company Operates Two Mines for the Purpose of Extracting

question 151

Multiple Choice

Perth Mining Company operates two mines for the purpose of extracting gold and silver. The Saddle Mine costs $16,000/day to operate, and it yields 50 oz of gold and 3,000 oz of silver per day. The Horseshoe Mine costs $17,000/day to operate, and it yields 75 oz of gold and 1,000 ounces of silver each day. Company management has set a target of at least 825 oz of gold and 18,000 oz of silver. How many days should each mine be operated so that the target can be met at a minimum cost? Find the range of values that the cost of operating the Saddle Mine per day can assume without changing the optimal solution.
Find the range of values that the requirement for gold can assume.
Find the shadow price for the requirement for gold.

• A) Saddle Mine = 9 days, Horseshoe Mine = 3 days, Minimum cost = $201,000 $201,200.00
• B) Saddle Mine = 3 days, Horseshoe Mine = 9 days, Minimum cost = $200,997 $200.00
• C) Saddle Mine = 3 days, Horseshoe Mine = 9 days, Minimum cost = $201,007 $200.00
• D) Saddle Mine = 3 days, Horseshoe Mine = 9 days, Minimum cost = $201,000 $200.00

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Definitions:

Work in Process

Inventory items that are partially completed goods, still undergoing manufacturing processes.

Materials Costs

The total expenses incurred for the materials used in the production process or in the provision of services.

Ending Work in Process

The value of goods that are in the process of being manufactured but are not yet complete at the end of an accounting period.

Materials

Refers to the raw inputs, supplies, or components used in the manufacturing or production process to create finished goods.