A company that manufactures electrical appliances is looking at one of its lines (washing machines), where it offers three different levels of specification: Basic which sells for £250, Medium which sells for £450 and Luxury which sells for £700. The production of each machine goes through four different stages and you have been provided with the following data table:
Process\Machine
Basic
Medium
Luxury
Cost per hour
Max. Available
Forming
1.5 hours
3 hours
7 hours
£5.50
6,500 hours
Machining
5 hours
8 hours
14 hours
£7.50
18,000 hours
Assembly
2.5 hours
4.5 hours
£9.50
8,500 hours
Testing
2 hours
2 ½ hours
£12.00
5,200 hours
The marketing department has also done some market research and believes demand for each of the models is limited to 1,450 units of the basic model, 900 of the medium and 750 of the luxury. You are required to:
1. Formulate this problem as a linear program and use Excel's Solver to arrive at a solution, identifying what is the maximum profit the company can achieve in the washing machine product line.
2. How would your answer change if the following happened:
a. Maximum demand for Medium model was 1,000; OR
b. Maximum available Assembly hours were 9,500.
3. Write a report with a recommended production and marketing plan for the company.