Campbell Motors is an auto dealership that specializes in the sale of station wagons and light trucks. Because of its reputation for quality and service, Campbell has a strong position in the regional market, but demand remains somewhat sensitive to price. While evaluating the new models, Campbells marketing consultant has come up with the following demand curves:

Truck Demand=50018*(Truck Price in thousands)

Wagon Demand=40011 *(Wagon Price in thousands)

The dealerships unit costs are $20,000 for trucks and $25,000 for wagons. Each truck requires three hours of prep labor, and each wagon requires two hours of prep labor. The current staff can supply 250 hours of labor.

Determine prices at which Campbell Motors can maximize the profit it generates from combined sales of trucks and wagons.

Hint:

1) You will need to assume some initial values for truck and wagon price which are the decisions. You will need to initialize the values so that you can create your spreadsheet model. You will get the optimized values after running your optimization model.

2) Make sure that you represent the price and cost of trucks and wagon in thousands of dollars in your calculations.

3) Revenue = Demand * price of each unit

4) Cost = Demand * Cost of each unit

5) Profit (objective)= Revenue Cost

6) Identify constraints if any