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2. The Primo Insurance Company is introducing two new product lines: special risk insurance and mortgages. The expected profit is $5 per unit on
2. The Primo Insurance Company is introducing two new product lines: special risk insurance and mortgages. The expected profit is $5 per unit on special risk insurance and $2 per unit on mortgages. Management wishes to establish sales quotas for the new product lines to maximize total expected profit. The work requirements are as follows: Work-Hours per Unit Work-Hours Department Special Risk Mortgage Available Underwriting 3 2 2400 Administration 0 1 800 Claims 2 0 1200 (a) Formulate a linear programming model for this problem. (b) Use Excel solver to solve this model. (c) Identify unbinding constraint(s). (d) Determine the shadow price with respect to underwriting. (e) If 100 work-hours were shifted from the Administration to the Underwriting, what would be the increase in profit?
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