QUESTION 3

Windhoek Enterprises manufactures two products from different combinations of the same resources. Unit selling prices and unit cost details for each product are as follows:

PRODUCT	D	G
	N$ PER UNIT	N$ PER UNIT
Selling price	115	120
Direct materials A (N$5 per Kg)	20	10
Direct materials B (N$3 per Kg)	12	24
Skilled labor (N$7 per Hour)	28	21
Variable overhead (N$2 per Machine Hour)	14	18
Fixed overheads	28	36
Profit	13	11

** Fixed overheads are absorbed using absorption rate per machine hour. This is an unavoidable central overhead cost which is not affected by the mix or volume of product produced. The maximum weekly demand for products D and G is 400 units and 450 units respectively, and this is the normal weekly production volume achieved by Windhoek Enterprises. However, for the next four weeks the achievable production level will be reduced as a result of a shortage of available resources. The resources that are expected to be available per week are as follows:

Direct material A	1,800 Kg
Direct material B	3,500 Kg
Skilled labor	2,500 Hours
Machine time	6,500 Machine Hours

The following is the final simplex tableau derived from the information above.

VARIABLES IN SOLUTION MIX	D	G	SKILLED LABOR	MACHINE TIME	MATERIAL A	MATERIAL B	QTY
D	1	0	0	0	0.34	-0.08	308.33
Skilled labor	0	0	1	0	-0.86	-0.17	416.67
G	0	1	0	0	-0.16	0.17	283.33
Machine time	0	0	0	1	-0.89	-0.92	1,791.67
Z - row	?	?	?	?	?	?	?
C - Z row	?	?	?	?	?	?

REQUIRED:

3.1) Formulate the equations for the objective function and the constraints for the above problem?

3.2) The optimal solution for this problem is shown on the simplex report above, complete the Z row, C-Z row and interpret the results (all amounts in Qty column, Z row and C-Z row for material A as well as material B)