The Great Pacific Appliance Company sells two models of toaster ovens, the Minitoaster (X1) and the Deluxe
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Question:
The Great Pacific Appliance Company sells two models of toaster ovens, the Minitoaster (X1) and the Deluxe Toaster Oven (X2). The firm earns a profit of P1400 for each Minitoaster regardless of the number sold. Profits for the Deluxe model, however, increase as more units are sold because of fixed overhead. Profit contribution on this model is given by the expression 1050 X2 + 12.5 (X2)2.
- The manufacturer of the toaster ovens can supply at most 1000 units for the two models.
- It typically takes ½ hour to sell the Minitoaster and 2/5 hour for the Deluxe. The Sales Department has 500 hours available.
- What is the linear programming (mathematical) model for this problem?
- Develop a spreadsheet model and find the optimal solution using Excel Solver. How many toaster ovens of each model should Great Pacific sell?
- What is the total profit contribution that Great Pacific can earn with the optimal sales quantities?
Related Book For
Fundamentals of Cost Accounting
ISBN: 978-1259565403
5th edition
Authors: William Lanen, Shannon Anderson, Michael Maher
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