Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Frosty's has been able to negotiate a larger credit line with its supplier. So now it has a credit limit of $56,000. It has also

Frosty's has been able to negotiate a larger credit line with its supplier. So now it has a credit limit of $56,000. It has also expanded the storage capacity at its warehouse to 30,000 cubic feet. Figure 1 shows its optimal purchasing decisions with the improved line and the increased storage space.

 What is the shadow price of the credit limit constraint?

Frosty Distributors Vegetable Whipped potatoes Creamed corn Black-eyed peas Artichokes Carrots Succotash Okra Cauliflower Green peas Spinach Lima beans Brussels sprouts Green beans Squash Broccoli Cost 2.15 2.20 2.40 4.80 2.60 2.30 2.35 2.85 2.25 2.10 2.80 3.00 2.60 2.50 2.90 Given Price 2.27 2.48 2.70 5.20 2.92 2.48 2.20 3.13 2.48 2.27 3.13 3.18 2.92 2.70 3.13 Data Min 300 400 250 0 300 200 150 100 750 400 500 100 500 100 400 Objective Decisions (Profit) (Cartons) Credit Space 0.12 1357.0 2.15 0.28 2000.0 2.20 900 0.30 900.0 2.40 150 0.40 150.0 4.80 1200 0.32 1200.0 2.60 800 0.18 800.0 2.30 600 -0.15 150.0 2.35 DI 300 0.28 300.0 2.85 3500 0.23 3500.0 2.25 2000 0.17 2000.0 2.10 3300 0.33 3300.0 2.80 500 0.18 500.0 3.00 0.32 3200.0 2.60 0.20 500.0 2.50 0.23 2500.0 LHS Max 1500 2000 3200 500 2500 Obj.Fn. = 5665.34 RHS Figure 1: Frosty Distributor's optimal solution. Constraints 2.90 56000

Step by Step Solution

3.39 Rating (155 Votes )

There are 3 Steps involved in it

Step: 1

Step 11 To determine the shadow price of the credit limit constraint we need to examine the change i... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Accounting Information for Decision-Making and Strategy Execution

Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young

6th Edition

137024975, 978-0137024971

More Books

Students also viewed these General Management questions

Question

What are conversion costs? What are prime costs?

Answered: 1 week ago

Question

What is a Balanced Scorecard?

Answered: 1 week ago