4-2. The Reddy Mikks Company is preparing a future expansion plan. A study of the market...
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4-2. The Reddy Mikks Company is preparing a future expansion plan. A study of the market indicates that the company can increase its sales by about 25%. The following proposals are being studied for the development of an action plan. (Refer to Example 3.3-1 for the details of the model and its solution.) Proposal 1. Because a 25% increase roughly equals a $5250 increase in revenue and the worths per additional ton of M1 and M2 are $750 and $500, respectively, the de- sired increase in production can be achieved by making a combined increase of $250 ($750 + $500) = 8.4 tons in each of M1 and M2. 2 Proposal 2. Increase the amounts of raw materials M1 and M2 by 6 tons and 1 ton, respectively. These increments equal 25% of the current levels of M1 and M2 (= 24 and 6 tons, respectively). Because these two resources are scarce at the current opti- mum solution, a 25% increase in their availability produces an equivalent increase in the levels of production of interior and exterior paints, as desired. What is your opinion of these proposals? Would you suggest a different approach for solving the problem? 4-2. The Reddy Mikks Company is preparing a future expansion plan. A study of the market indicates that the company can increase its sales by about 25%. The following proposals are being studied for the development of an action plan. (Refer to Example 3.3-1 for the details of the model and its solution.) Proposal 1. Because a 25% increase roughly equals a $5250 increase in revenue and the worths per additional ton of M1 and M2 are $750 and $500, respectively, the de- sired increase in production can be achieved by making a combined increase of $250 ($750 + $500) = 8.4 tons in each of M1 and M2. 2 Proposal 2. Increase the amounts of raw materials M1 and M2 by 6 tons and 1 ton, respectively. These increments equal 25% of the current levels of M1 and M2 (= 24 and 6 tons, respectively). Because these two resources are scarce at the current opti- mum solution, a 25% increase in their availability produces an equivalent increase in the levels of production of interior and exterior paints, as desired. What is your opinion of these proposals? Would you suggest a different approach for solving the problem?
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Answer Lets analyze each proposal and evaluate their feasibility Proposal 1 suggests achieving the desired increase in production by increasing raw ma... View the full answer
Related Book For
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
Posted Date:
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