Q.5 A firm is making two products A & B. Each unit of A incurs a cost of production to the tune of $150 and that of B incurs a cost of $200. Product A earns a profit of $15/unit and B gets $20/unit. The estimated monthly demand of both A & B is at maximum 500 units. Monthly production budget is set at $50,000.How many units of A & B should the firm make in order to maximize profit. Conduct sensitivity analysis and answer the following questions: 1. State the optimal solution. 2. What is the objective function value? 3. Find out the range of profit for A in the objective function for which the above solution remains optimal.
Q.5 A firm is making two products A & B. Each unit of A incurs a cost of production to the tune of $150 and that of B incurs a cost of $200. Product A earns a profit of $15/unit and B gets $20/unit. The estimated monthly demand of both A & B is at maximum 500 units. Monthly production budget is set at $50,000.How many units of A & B should the firm make in order to maximize profit. Conduct sensitivity analysis and answer the following questions: 1. State the optimal solution. 2. What is the objective function value? 3. Find out the range of profit for A in the objective function for which the above solution remains optimal.
Chapter19: Pricing Concepts
Section: Chapter Questions
Problem 6DRQ
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Transcribed Image Text:Q.5 A firm is making two products A & B. Each unit of A incurs a cost of production to the tune
of $150 and that of B incurs a cost of $200. Product A earns a profit of $15/unit and B gets
$20/unit. The estimated monthly demand of both A & B is at maximum 500 units. Monthly
production budget is set at $50,000.How many units of A & B should the firm make in order to
maximize profit.
Conduct sensitivity analysis and answer the following questions:
1. State the optimal solution.
2. What is the objective function value?
3. Find out the range of profit for A in the objective function for which the above solution
remains optimal.
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