Reference no: EM132550888

You are the owner of a company, called AltGen, that produces and markets alternators and generators in the North American market. Your company has recently received a large order from a preferred customer for alternators and generators. Each alternator and generator requires specialized wiring and bolts to produce. The table below summarizes the requirements of demand, bolts, and wiring per unit of alternator and generator.

Number of units ordered from customer :

5000 =Alternator

3000=Generator

Wiring: Yards required per unit:

2 =Alternator

1.5 =Generator

Bolts: Number required per unit

4 =Alternator

8 =Generator

At the moment, you company does not have the production capacity and parts required to fulfill the entire order. The company only has 6,000 yards of wire available and only 30,000 bolts. The company is, however, able to outsource some of its production for this order to a subsidiary in San Francisco, called GenAdd. The cost of production for both companies are:

Cost to produce in-house:

$50=Alternator

$60 =Generator

Cost to buy in

$60 =Alternator

$80 =Generator

QUESTION:

Problem 1: How many alternators and generators should AltGen produce itself, and what number of these products should it purchase from GenAdd in order to fill the customer demand at the lowest possible cost?