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Western Ontario Chassis Mfg. Inc. produces high-quality polished steel and aluminum sheeting and two lines of industrial chassis for the rack mounting of Internet
Western Ontario Chassis Mfg. Inc. produces high-quality polished steel and aluminum sheeting and two lines of industrial chassis for the rack mounting of Internet routers, modems, and other telecommunications equipment. The contribution margin (contribution toward profit) for steel sheeting is $0.40 per pound and for aluminum sheeting is $0.60 per pound. Western Ontario Chassis Mfg. Inc. earns $12 contribution on the sale of a Standard chassis rack and $15 contribution on a Deluxe chassis rack. During the next production cycle, Western Ontario Chassis Mfg. Inc. can buy and use up to 25,800 pounds of raw unfinished steel either in sheeting or in chassis. Similarly, 20,400 pounds of aluminum are available. One standard chassis rack requires 16 pounds of steel and 8 pounds of aluminum. A Deluxe chassis rack requires 12 pounds of each metal. The output of metal sheeting is restricted only by the capacity of the polisher. For the next production cycle, the polisher can handle any mix of the two metals up to 4,000 pounds of metal sheeting. Chassis manufacture can be restricted by either metal stamping or assembly operations; no polishing is required. During the cycle no more than 2,500 total chassis can be stamped, and there will be 920 hours of assembly time available. The assembly time required is 24 minutes for the Standard chassis rack and 36 minutes for the Deluxe chassis rack. Finally, Canadian industrial market conditions in year 2023 limit the number of Standard chassis racks sold to no more than 1,200 Standard and no more than 1,000 Deluxe. Any quantities of metal sheeting can be sold. Required: Create a LP model in good form and find an optimal solution using Solver. a) Find an optimal LP solution to Western Ontario Chassis Mfg. problem. b) What is the production plan? c) What is the total profit? d) Obtain a sensitivity report from Solver and identify which constraints are binding? e) Toronto Advertising Agency LLP has devised a marketing plan for the Western Ontario Chassis Mfg. Inc. that will increase the sales demand for Deluxe chassis. This plan will increase sales demand by 75 Deluxe chassis per month at a cost of $100 per month. Should Western Ontario Chassis Mfg. Inc. adopt the marketing plan? Briefly explain why with your calculations.
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