1. What factors could lead to even better level of performance:(3 points)
2. For each department, what is the marginal value of additional overtime capacity?
3. What is the marginal value of additional advertising dollars?
4. What is the marginal value of additional sales for each product?
   

Costs and prices: Ceiling price Material costs Production costs Unit prot Decision Variables: Units produced Advertising Obiective function: max (Prot): Constraints: Capacityconstraints: Department 1 regular time Department 1 overtime Department 2 regular time Department 2 overtime Demand constraints: Table lamps Floor lamps Ceiling lamps Pendant lamps Advertising constraint 60000 I.HS 0000 0000 1 8000 r=regulartime; o =overtime Table lamps (1') Floor lamps (F) Ceiling lamps [C] Pendant lamps [P] \"mun-alum 120 120 150 150 100 100 160 160 160 RHS 100000 25000 90000 24000 60000 20000 100000 37700 18000 21800 0 15000 24000 15000 20000 Hawley Lighting Company This problem was taken from Powell, 5.6. and Baker, K.R. (2007). Management Science: The Art of Modeling with Spreadsheets, 2nd ed., Hoboken, NJ: John Wiley & Sons, Inc., p. 280-281 The Hawley Lighting Company manufactures four types of lamps at its factory including table lamps, floor lamps, ceiling lamps, and pendant lamps. Table 1 presents the average material costs for each of the products. Each product is made in one of two production processes by purchasing components, assembling and testing the product, and finally packaging it for shipping. Table lamps and floor lamps go through the assembly and finishing process in Department 1, while ceiling fixtures and pendant lamps go through the process in Department 2. Variable production costs and capacities are shown in Table 2. The capacities are measured in units of product. Note that there are regular and overtime possibilities for each department. Average selling prices for the four products are known, and estimates have been made of the market demand for each product at these prices (see Table 3). Sales levels can also be affected by advertising expenditures. Starting with the demand levels in the table, an increase of up to $10,000 in advertising raises the demand by the percentage shown in the last row. An expenditure of less than $10,000 in advertising will lead to a proportional effect on demand. For example, an increase in advertising of $5,000 for table lamps would raise demand by 6 percent, or 3,600 units. However, there is a budget limit of $18,000 on the total amount to be spent on advertising among all four products. Table 1 Product Table Floor Ceiling Pendant Material cost $66 85 50 80 Table 2 Process Regular Time Overtime Unit Cost Capacity Unit Cost Capacity Department 1 $16 100,000 18 25,000 Department 2 12 90,000 15 24,000 Table 3 Table Floor Ceiling Pendant Selling price $120 150 100 160 Potential sales (000) 60 20 100 35 Advertising effect 12% 10% 8% 15%