The R&D Division of Innovative Products Inc. has been developing four possible new product lines (labeled A, B, C, and D). Management must now make a decision as to which of these four products will actually be produced and at what levels, with the objective of determining the product mix and production that maximizes the net revenue (revenue minus appropriate start-up costs). A substantial start-up cost is associated with beginning the production of any product, as given in the first row of the table below, with the associated revenues in the second row. Production limits are indicated in the last row of the table. In addition to the production limits, management has imposed specific policy constraints on final product decisions. They have decided that no more than two of the products can be produced. Also, if product C is produced then product A will not be produced (and vice-versa).

Q)

Formulate (set up) the linear programming model for the following problem. Be sure to clearly define the decision variables, objective function and indicate all restrictions related to the decision variables.

	Products
	A	B	C	D
Start-up Costs ($)	55,000	40,000	80,000	65,000
Revenue ($)	70	60	100	85
Production limits	15,500	32,000	25,000	13,500