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The West-Jet Company builds customized small jet airplanes. West-Jet has recently received purchase requests from three customers with short deadlines. However, because the limited production
The West-Jet Company builds customized small jet airplanes. West-Jet has recently received purchase requests from three customers with short deadlines. However, because the limited production capacity, it is obvious that the company cannot fulfill all the orders. Therefore, a decision now needs to be made on the number of airplanes the company will agree to produce (if any) for each of the three customers. The relevant data are given in the next table. The first row gives the start-up cost required to initiate the production of the airplanes for each customer. Once production is under way, the marginal net profit (which is the price minus the production cost) from each airplane produced is shown in the second row. The third row gives the percentage of the available production capacity that would be used for each airplane produced. The last row indicates the maximum number of airplanes requested by each customer (but less will be accepted). Customer 1 Customer 2 Customer 3 Start-up Cost $3 million $2 million 0 Marginal net profit $2 million $3 million $0.8 million Capacity used per airplane 20% 40% 20% Maximum order 3 planes 2 planes 5 planes
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