Project #30421 - LP paper 3

A sudden increase in the demand for smoke detectors has left Pacific Alarms with insufficient capacity to meet
demand. The company has seen monthly demand from its retailers for its electronic and battery operated
detectors rise to
20,000 and 10,000, respectively. Pacific’s production process involves three departments:
fabrication, assembly, and shipping. The relevant quantitative data on production and prices are summarized
below:
Department
Monthly Hours
Available
Hours/Unit
(E
lectronic)
Hours/Unit
(Battery)
Fabrication
2,000
0.15
0.10
Assembly
4,200
0.20
0.20
Shipping
2,500
0.10
0.15
Variable cost/unit
$18.80
$16.00
Retail price
$29.50
$28.00
Attached is the spreadsheet and Solver Parameter sheet that Pacific Alarms was using to attempt to compute
profit when they realized that their sales exceeded the ability to meet those sales due to insufficient resources.
Fortunately, t
he company has th
e option to obtain additional units from a subcontractor, who has offered to
supply up to 20,000 units per month, in any combination of electric and battery
-
operated models, at a charge of
$21.50 per unit. For this price, the subcontractor will test and s
hip its models directly to the retailers without
using Pacific’s production process.
M
odify the attached spreadsheet and
Solver Parameter sheet to take the new source of smoke detectors into
account
by adding variables and constraints
. Then determine the optimal production by Pacific Alarms and the
subcontractor and calculate the expected profit based on this new partnership.
Keep in mind that Pacific
and
the subcontractor can only sell whole numbers of alarms, so make sure Solver provides an integer
solution.

Subject Business
Due By (Pacific Time) 05/12/2014 12:00 am
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