Question
Della Simpson, Inc., sells two popular brands of cookies: Dellas Delight and Bonnys Bourbon. Dellas Delight goes through the Mixing and Baking departments, and Bonnys
Della Simpson, Inc., sells two popular brands of cookies: Dellas Delight and Bonnys Bourbon. Dellas Delight goes through the Mixing and Baking departments, and Bonnys Bourbon, a filled cookie, goes through the Mixing, Filling, and Baking departments. Michael Shirra, vice president for sales, believes that at the current price, Della Simpson can sell all of its daily production of Dellas Delight and Bonnys Bourbon. Both cookies are made in batches of 3,000. In each department, the time required per batch and the total time available each day are as follows:
A | B | C | D |
Department Minutes | |||
Mixing | Filling | Baking | |
Dellas Delight | 30 | 0 | 10 |
Bonnys Bourbon | 15 | 15 | 15 |
Total Available per day | 660 | 270 | 300 |
Revenue and cost data for each type of cookie are as follows:
A | B | C |
Dellas Delight | Bonnys Bourbon | |
Revenue per batch | 500 | 375 |
Variable cost per batch | 175 | 125 |
Contribution Margin per batch | 325 | 250 |
Monthly fixed costs | ||
(allocated to each product) | 18,650 | 22,350 |
1. Using D to represent the batches of Dellas Delight and B to represent the batches of Bonnys Bourbon made and sold each day, formulate Shirras decision as an LP model.
2. Compute the optimal number of batches of each type of cookie that Della Simpson, Inc., should make and sell each day to maximize operating income.
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