The way to maximize the manufacturer’s profit. Linear programming: It is a mathematical modeling procedure where a linear function is maximized or minimized subject to certain constraints. This method is widely useful in making a quantitative analysis which is essential for making important business decisions.

Question

Three methods can be used for producing heat sensors for high-temperature furnaces. Method A will have a fixed cost of $140,000 per year and a production cost of $62 per part. Method B will have a fixed cost of $210,000 per year and a production cost of $28 per part. Method C will require the purchase of equipment costing $500,000. It will have a life of five years and a 25% of first cost salvage value. The production cost will be $53 per part. At an interest rate of 10% per year, determine the breakeven annual production rate between the two lowest cost methods.

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Chapter 4, Problem 54P

Summary Introduction

To determine: The way to maximize the manufacturer’s profit.

Linear programming:

It is a mathematical modeling procedure where a linear function is maximized or minimized subject to certain constraints. This method is widely useful in making a quantitative analysis which is essential for making important business decisions.

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