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Crebo Manufacturing produces four types of structural support fittings-plugs, rails, rivets, and clips-which are machined on two CNC machining centers. To find an optimal solution to maximize the gross profit, the Excel add-in Solver was used. The accompanying figure shows the Solver Sensitivity Report. Using only the information in the Sensitivity Report, complete parts a through e.
(i) Click the icon to view the Solver Sensitivity Report.
a. Explain the value of the reduced cost (-0.4) for the number of plugs to produce. Choose the correct answer below.
A. The value -0.4 indicates that if the gross margin of plugs goes down by 0.4, the company might start making plugs.
B. The value -0.4 indicates that the gross margin of plugs would need to be 0.4 more than the gross margin for clips before the company might start making plugs.
C. The value -0.4 indicates that the gross margin of plugs would need to be 0.4 less than the gross margin for clips before the company might start making plugs.
D. The value -0.4 indicates that if the gross margin of plugs goes up by 0.4, the company might start making plugs.
b. If the gross margin for rails is decreased to $1.10, can you predict what the optimal solution and profit will be? Select the correct choice and, if necessary, fill in the answer box(es) to complete your choice.
A. The optimal solution would not change. The profit would not change.
B. The optimal solution and profit might change, but their values cannot be determined.
C. The optimal solution might change, but the values cannot be determined. The profit would change to $ (Type integers or decimals rounded to two decimal places as needed.)
D. The optimal solution would not change. The profit would change to $
(Type integers or decimals rounded to two decimal places as needed.)
E. The optimal solution would not change. The profit would change, but its value cannot be determined.
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