Chapter 5, Problem 8RP

a.

Explanation of Solution

Overtime cost

• Let $\text{RM}$ be the number of units of raw materials purchased each week, $\text{A1}$ be the dollars spent each week on advertising product 1 and $\text{A2}$ be the dollars spent each week on advertising product 2

b.

Explanation of Solution

Optimum solution

• Let $\text{RM}$ be the number of units of raw materials purchased each week, $\text{A1}$ be the dollars spent each week on advertising product 1 and $\text{A2}$ be the dollars spent each week on advertising product 2.
• The new optimum solution value or profit is calculated by the given formula:

c.

Explanation of Solution

Pay for another unit of raw material

• Let $\text{RM}$ be the number of units of raw materials purchased each week, $\text{A1}$ be the dollars spent each week on advertising product 1 and $\text{A2}$ be the dollars spent each week on advertising product 2.
• From the LINDO output, the shadow price for row 5 is $4

d.

Explanation of Solution

Pay for another hour of machine time

• Let $\text{RM}$ be the number of units of raw materials purchased each week, $\text{A1}$ be the dollars spent each week on ad

e.

Explanation of Solution

Profit

• Let $\text{RM}$ be the number of units of raw materials purchased each week, $\text{A1}$ be the dollars spent each week on advertising product 1 and $\text{A2}$ be the dollars spent each week on advertising product 2.
• The new optimum solution value or profit is calculated by the given formula:

  $\text{New value = Old value – }(\text{Key column value × Key row value}$

f.

Explanation of Solution

Shadow price

• Let $\text{RM}$ be the number of units of raw materials purchased each week, $\text{A1}$ be the dollars spent each week on advertising product 1 and $\text{A2}$