Jessica Kirst is the new owner of Coffee Country Roasters. They roast and blend coffee to sell on the internet. Their best sellers are Best Blend and Economy Blend coffee. Both are blended from three basic grades of coffee:

Best blend: 50% grade A, 20% grade B, and 30% grade C

Economy: 20% grade A, 50% grade B, and 30% grade C

The firm is given the option of buying up to 100 tons of grade A, 100 tons of grade B, and 75 tons of grade C. The profit on the Best Blend is $150 per ton and the profit on the Economy Blend is $120 per ton.

Jessica would like to maximize her profit. Explain your reasoning referencing shadow price, reduced cost, range of feasibility, range of optimality, etc. where appropriate.

Sensitivity Report:

Solve three parts:

a. The profit on Economy Blend coffee has dropped by $10 due to a bad economy. What impact will this have on our production plan and total profit?

b. The bean broker just called to tell you that due to some flooding only 80 tons of grade B beans are available. How will this affect your production plan and profit?

c. A new supplier offers you 22 tons of grade A beans for $1600. You must buy all 22 tons or none at all. Should you accept the offer? If yes, how do the optimal solution and optimal profit change? Remember to consider the cost of the additional beans.

Variable Cells