Question
A pharmaceutical manufacturer is considering the production of five possible vaccines. After its initial analysis, the manufacturer must now decide which, and how much, of
A pharmaceutical manufacturer is considering the production of five possible vaccines. After its initial analysis, the manufacturer must now decide which, and how much, of these vaccines should be produced.
The manufacturer will incur a significant setup cost when starting the production of a vaccine, as shown in the first row of the table below. The table also shows the marginal revenue for each vaccine (per 1,000 units produced), and the manufacturer wants to find the product mix that will maximize its overall profit.
Vaccine 1 2 3 4 5
Setup Cost $85,000 $60,000 $70,000 $40,000 $50,000
Marginal Revenue $75 $80 $90 $60 $70
The manufacturer has two possible locations for the production of these vaccines. It can produce in location A, where 6,000 labor hours are available, or in location B, where 6,500 labor hours are available. The labor requirements (in hours) to produce 1,000 units of each vaccine at each of the locations is given in the following table.
Location 1 2 3 4 5
A 6 4 6 3 5
B 4 5 3 6 4
To retain flexibility, the manufacturer wants to use only one of the locations. The location chosen should be the one that provides the highest profit.
Formulate this problem as a Mixed Integer Programming problem.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started