Question
The BlueSky Auto Company (BSAC) produces four types of gasoline-based cars: subcompact, compact, intermediate and luxury. They also produce electric trucks and vans. Due to
The BlueSky Auto Company (BSAC) produces four types of gasoline-based cars: subcompact, compact, intermediate and luxury. They also produce electric trucks and vans. Due to capacity limit, BSAC can make at most 1 million vehicles per year. Subcompacts and compacts are made in one facility with a total annual capacity of 620,000 cars. Intermediate and luxury cars are product in another facility with capacity of 400,000 units; and the electric truck/van facility has a capacity of 375,000. BSACs management team requires that subcompacts and compacts must constitute at least half of the product mix for the four gasoline-based cars. Also, the management wants to have at least 40% total vehicles are electric. The Corporate Average Fuel Economy (CAFE) standards in the Energy Policy and Conservation Act require an average fuel economy of at least 27 mpg for the gasoline-powered fleet.
Profit margins, market demand potential, and fuel efficiencies are summarized as follows:
Vehicle Type | Power Source | Capacity Limit (units in 000) | Profit Margin ($/vehicle) | Market Demand (units in 000) | Fuel Efficiency (mpg) |
Subcompact | Gasoline | 620 | 150 | 600 | 40 |
Compact | Gasoline | 225 | 400 | 34 | |
Intermediate | Gasoline | 400 | 250 | 300 | 25 |
Luxury | Gasoline | 500 | 225 | 20 | |
Truck | Electric | 375 | 400 | 425 | - |
Van | Electric | 200 | 300 | - |
Implement the above model in Excel and use Analytic Solver to solve the above linear optimization problem. Please attach the Excel spreadsheet showing your model.
How many gasoline-powered cars and how many electric cars should BSAC make to maximize its annual profit? What is the maximum annual profit for BSAC?
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