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QUESTION 2 Molitup Limited (ML) manufactures three products: Product MM, Product LL and Product TT. The contribution per unit of the respective products is as
QUESTION 2 Molitup Limited (ML) manufactures three products: Product MM, Product LL and Product TT. The contribution per unit of the respective products is as follows: Product MM Product LL Product TT Contribution per unit 600 500 800 Three processes are required for the manufacture of these products: Process Alpha, Process Beta and Process Gamma. The processing time (in hours) required for the manufacture of a unit of each product is as follows: Product MM Product LL Product TT Process Alpha Process Beta Process Gamma 20 30 40 80 60 20 50 90 60 The monthly availability of Process Alpha, Process Beta and Process Gamma are limited to 40,000 hours, 80,000 hours and 50,000 hours respectively. The objective of the company is to maximise contribution. Required: a) Formulate the initial simplex tableau to be used for the determination of the optimum monthly production plan. (4 marks) b) Using the initial simplex tableau in part (a) as the starting point, formulate the second simplex tableau. You should show all workings and your answer should be rounded to 2 decimal places. (18 marks) c) Explain why the simplex method is superior to the graphical method. d) Explain the following terms: (i) Shadow price (ii) Slack variable (iii) Binding constraints (iv) Basic variable (4 marks) (Q2 Total 30 marks)
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