Advertising and New Customers
1) Edwards Manufacturing Company purchases two component parts from three different suppliers. The suppliers have limited capacity, and no one supplier can meet all the company’s needs. In addition, the suppliers charge different prices for the components. Supplier
Component 1 2 3 1 $12 $13 $14 2 $10 $11 $10
Each supplier has a limited capacity in terms of the total number components it can supply. However, as long as Edwards provides sufficient advance orders, each supplier can devote its capacity to component 1, component 2, or any combination of the two compoents, if the total number of units ordered is within its capacity.
Supplier 1 2 3
Capacity 600 1000 800
If the Edwards production plan for the next period includes 1000 units of component 1 and 800 units of component 2, what purchases do you recommend? That is, how many units of each component should be ordered from each supplier? What is the total purchase cost for the components?
2) Two types of crude oil are used to produce two grades of gasoline. The percentage of important ingredients (A and B) in each type of crude oil differs as does the cost per gallon as shown below:
Crude oil Cost/gallon Ingredient A Ingredient B
1 $0.10 20% 60%
2 $0.15 50% 30%
Each gallon of regular gasoline must contain at least 40% of A, whereas each gallon of high octane can contain at most 50% of B. Daily demand for regular octane gasoline is
800,000 gallons and daily demand for high octane is 500,000 gallons. How many gallons of each type of crude oil should be used in regular and in high octane gasoline in order to satisfy the daily demand at a minimum cost?
3) Frandec Company manufactures, assembles, and rebuilds material hand equipment used in warehouses and distribution centers. One product, called a Liftmaster is assembled from four components: a frame, a motor, two supports, and a metal strap. Frandec is planning a production of 5000
Component 1 2 3 1 $12 $13 $14 2 $10 $11 $10
Each supplier has a limited capacity in terms of the total number components it can supply. However, as long as Edwards provides sufficient advance orders, each supplier can devote its capacity to component 1, component 2, or any combination of the two compoents, if the total number of units ordered is within its capacity.
Supplier 1 2 3
Capacity 600 1000 800
If the Edwards production plan for the next period includes 1000 units of component 1 and 800 units of component 2, what purchases do you recommend? That is, how many units of each component should be ordered from each supplier? What is the total purchase cost for the components?
2) Two types of crude oil are used to produce two grades of gasoline. The percentage of important ingredients (A and B) in each type of crude oil differs as does the cost per gallon as shown below:
Crude oil Cost/gallon Ingredient A Ingredient B
1 $0.10 20% 60%
2 $0.15 50% 30%
Each gallon of regular gasoline must contain at least 40% of A, whereas each gallon of high octane can contain at most 50% of B. Daily demand for regular octane gasoline is
800,000 gallons and daily demand for high octane is 500,000 gallons. How many gallons of each type of crude oil should be used in regular and in high octane gasoline in order to satisfy the daily demand at a minimum cost?
3) Frandec Company manufactures, assembles, and rebuilds material hand equipment used in warehouses and distribution centers. One product, called a Liftmaster is assembled from four components: a frame, a motor, two supports, and a metal strap. Frandec is planning a production of 5000