Sunshine Chairs The small factory Sunshine Chairs in San Tropez, France, produces outdoor chairs and tables for use in gardens, balconies and terraces. All products are handmade and produced in sets of four chairs and one table. The company has already two different types of outdoor chairs and tables on the market: Standard and Robust. The Standard sets are low priced at €800 and light weight, whereas the Robust set is all weather proof and can be left outdoors during summer and winter. The Robust set sells for €1000. Cost of a Standard set is €700 and the Robust is €850.

Sunshine Chairs is considering the introduction of a new type of outdoor furniture, called Romantic. The chairs and tables of this type are more fancy, they should represent the good life of the French Mediterranean coast. The estimated variable cost of a Romantic set is estimated at €980. The company has not yet decided on the selling price, but it should be reasonable to fix it at €1200 per set.
All sets are manufactured by three production processes: Welding, Galvanising and Finishing.
The technical production data are given in the following table, jointly with the maximum number of production hours available in each process.

All data are needed to make the new production plan for the coming year. Sunshine Chairs is determined to introduce the new product and wants to come up with a profitable production plan for the new season.
Required:
1. Define an LP model and define the production plan for the coming year.
2. What could Sunshine Chairs do in order to make the production of Romantic garden sets an attractive alternative?
3. Suppose Sunshine Chairs could raise the price of Romantic sets to €1240 per set. How does the final solution look?
4. An alternative to raising the selling price is to economise on costs (restore the original selling price for Romantic). Suppose Sunshine Chairs is able to economise on welding hours for the Romantic from 1.5 to 1, which also brings down the variable costs to €940.
Which alternative is better? Rising prices or reducing costs?

Transcribed Image Text:

Production hours Welding Standard 1 Galvanising 2 Finishing 1 Robust 1 1 3 Romantic 1,5 3 4 Available hours 240 300 320