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Activity 2 Assume that a firm must decide on an optimal combination of money spend on logistics (L) and on marketing expenses (M) to maximise total revenue. Assume the following total revenue (TR) function. TR = 4000 -8L +30M + LM - 0.5M - 0.4L Derive/calculate the following: Task Answer The optimal value of L. The optimal value of M. The optimal sales revenue. Activity 3 Camco (Pty) Lid is contemplating the introduction of two new product lines. Product A will sell for R300 000 per unit and product B for R200 000 per unit. In order to introduce these new product lines the manufacturer must consider the following: Fixed capital outlay cap (technology and fixed costs) = R800m Operating cost outlay cap (production costs, marketing & admin expenses) = R800m Human resource outlay cap (all skill levels) = R400m The firm has decided that product A is the main product line (flagship"). Technically the total fixed cost outlay is for product A but product B will be produced on the same production line. Production schedules/runs will cater for this state of affairs. The estimated required outlay for a unit of product A is R200 000 (60% fixed cost, 20% operating cost and 20% human resource costs). The estimated cost outlay for a unit of product B is R100 000 (70% operating cost and 30% human resource costs). Question Answer State the primal problem and the constraint equations. Illustrate the feasible region with the aid of a diagram. (Model X on the vertical-axis and Model Y on the horizontal-axis Show the corner point solutions. Final solution