Explain the shadow price for the finishing process

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Reference no: EM132239324

Sanderson Manufacturing produces ornate, decorative wood frame doors and windows. Each items produce goes through three manufacturing processes: cutting, sanding, and finishing. Each door produced requires 1 hour in cutting, 30 minutes in sanding, and 30 minutes in finishing. Each window requires 30 minutes in cutting, 45 minutes in sanding, and 1 hour in finishing. In the coming week Sanderson has 40 hours of cutting capacity available, 40 hours of standing capacity, and 60 hours of finishing capacity. Assume that all doors produced can be sold for a profit of $500 and all windows can be sold for a profit of $400.

a) Formulate an LP model for this problem.

b) Solve it via Excel- Solver and use the Sensitivity Report to answer parts (c), (d), (e) , (f) , (g) and (h)

c) What is the optimal solution?

d) If the profit on doors increased to 700$, would the optimal solution change?

e) If the profit on windows decreased to 200$, would the optimal solution change?

f) Explain the shadow price for the finishing process.

g) If 20 additional hours of cutting capacity became available, how much additional profit could the company earn?

h) Suppose another company wanted to use 15 hours of Sanderson’s sanding capacity and was willing to pay 400$ per hour to acquire it. Should Sanderson agree to this? How (if at all) would your answer change if the company instead wanted 25 hours of sanding capacity?

Reference no: EM132239324

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