Optimal sales mix for a retailer, sensitivity analysis. (Chapter Appendix) Always Open, Inc., operates a chain of food stores open 24 hours a day. Each store has a standard 48,000 square metres offloor space available for merchandise. Merchandise is grouped in two categories: gro¬

cery products and dairy products. Always Open requires each store to devote a minimum of 12,000 square metres to grocery products and a minimum of 9,600 square metres to dairy prod¬

ucts. Within these restrictions, each store manager can choose the mix of products to carry.

The manager of the Winnipeg store estimates the following weekly contribution margins per square metre: grocery products, $12; dairy products, $3.60.

Required 1. Formulate the decision facing the store manager as an LP model. Use G to represent square metres of floor space for grocery products and D to represent square metres of floor space for dairy products.

2. Why might Always Open set minimum bounds on the floor space devoted to each line of products?

3. Compute the optimal mix of grocery products and dairy products for the Winnipeg store.

4. Will the optimal mix determined in requirement 3 change if the contribution margins per square metre change to grocery products, $9.60, and dairy products, $6?