Finance Question-Klein Industries manufactures three types of portableair compressors
Finance Question
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13-7. Klein Industries manufactures three types of portableair compressors: small, medium, and large, which haveunit profits of $20.50, $34.00, and $42.00, respectively.The projected monthly sales are:
Small Medium Large Minimum 14,000 6,200 2,600 Maximum 21,000 12,500 4,200
The production process consists of three primary activities: bending and forming, welding, and painting. The amount of time in minutes needed to process each product in each department is shown below: Small Medium Large Available Time
Bending/forming 0.4 0.7 0.8 23,400Welding 0.6 1.0 1.2 23,400Painting 1.4 2.6 3.1 46,800
How many of each type of air compressor should the company produce to maximize profit a. Formulate and solve a linear optimization model using the auxiliary variable cells method and write a short memo to the production manager explaining the sensitivity information. b. Solve the model without the auxiliary variables and explain the relationship between the reduced costs and the shadow prices found in part a.
