Taking the LP formulation of the transfer pricing problem of the Jayfax Company as your starting point, analyse the effect of having an additional constraint that limits the total production of A₂ to 600 units. What should the new transfer prices be, and how would the allocation of profits to each division be affected?

Further, suppose that A₂ can be sold to an external market at a price of:

(a) f3

(b) f6

(c) f9 

How does the optimal solution change, and what should the interna I transfer prices be?