Burrow Co. manufactures and sells two kinds of calculators, business and scientific.While both calculators sell for $200,
Question:
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Burrow Co. manufactures and sells two kinds of calculators, business and scientific.While both calculators sell for $200, the contribution margin is $80 for a business calculator and $60 for a scientific calculator. The business calculator requires one AA computer chip, while the scientific calculator requires one AAA chip. The two calculators are produced on the same production line that has a maximum capacity of 2,400 labor hours, but the business calculator takes twice as many labor hours as the scientific calculator. The AA chip costs $30, the AAA chip costs $80, and direct labor costs $10/hour. Each business calculator is charged $60 in direct labor. Both calculators are charged $3 for fixed factory overhead. Burrow Co. can only acquire 200 AA chips and 600 AAA chips, but can sell all the calculators it produces.
- Set up the linear programming objective function and constraints to optimize the production of business and scientific calculators and determine the optimal solution.
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