Production line capacities, Strategic Management

Product Mix - Satchmo & Satchmo Electronics developes two products that can be make on two different production lines.  Both products have their lowest production costs when produced on the more modern of the two production lines.  Though , the modern production line does not have the capacity to handle the total demand.  As a result, some production will have to be routed to the older production line.  The following data explain total production requirements, production line capacities, and production costs.

                   Production Cost/Unit        Minimum Production
Product            Modern Line      Old Line    Requirements
    A                    $3                 $5        500 units
    B                    $2.50            $4        700 units
Production Capability    800            600                    

Clearly explain your decision variable and formulate a linear program model that can be used to produce the most economical production routing.

Posted Date: 3/25/2013 4:18:28 AM | Location : United States







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