# Linear programming - profit maximisation

• Dec 24th 2009, 03:52 PM
jb7
Linear programming - profit maximisation
I can do most the question, but just get stuck on the final question. Here is the question

1. Gordon Ltd makes 2 products, Tennis racquets and badminton racquets, each using the same materials and the same skilled labour.

The costs of the products per unit of production are as follows:

.................................................. .............£........................£
Selling price............................................. 140 ..................120
Materials @ £18 per KG..............................9................. ......6
Labour @ £12 per hour..............................60.............. ....... 60
Other variable cost...................................18......... ...............12
Allocation of fixed cost.............................. 33........................22

Profit per unit...........................................20. ........................20

The company is drawing up production plans for the 3 months to 31 March 2010. The anticipated demand in the period is for 6000 tennis racquets and 6000 badminton racquets.

There are only 4000kg of material and 50000 hours of labour available in the period.

The company has a contract to supply 1000 tennis and 2000 badminton racquets which must be satisfied. The company wishes to maximise profit in the period

(a) Formulate a linear programming model for this problem. (10 marks)

(b) Use the graphical method to determine how many doors and windows should be produced (20 marks)

(c) What are the shadow prices of materials and labour? What do these prices mean? (10 marks)

(d) If new supplies of materials became available at £15 per kg should they be purchased? If so how much extra material should be bought? (10 marks)

I can do up to part C, i.e calculate the shadow prices for materials and labour. However I cannot figure out how to do part D! - is it something to do with the shadow prices calculated in part C? My thoughts of how to do it was to do the WHOLE THING again, but with materials priced at £15 per kg, rather then at £18 per kg as they were initially....but something tells me that doing this incorrect. Anyone have any idea how to do this part D?
• Dec 28th 2009, 01:11 PM
jb7
profit was maximised where the materials and labour constraints crossed, which gave 4000 units of x (tennis rackets), and 6000 units of y (badminton rackets), which is indeed more then the contract, which is 1000 units of x and 2000 units of of y. However, I have just noticed that at the start of the question it specified that there is demand for 6000 x and 6000 y, although my profit maximisation only gives 4000x and 6000y. Is this "part D" something to do with buying enough materials so that those extra 2000 units of x are sold, so that demand for x is met at 6000 units ? (demand for y however seemed to be already met with the current maximisation).

Furthermore, the shadow price for materials was calculated as £66 (part C), although I don't know if this has anything to do with helping me solve part D?

Still not sure where to start though, if materials are now available at £15 per kg, this would change the materials constraint to 0.6x + 0.4y <=4000. Should I just solve the whole thing again using this constraint?