How many pairs of each type should the factory make

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Reference no: EM131839289

Imelda manages a shoe factory that makes two types of shoes: casual shoes and dress shoes. The factory can make a total of 1,000 pairs of shoes per day. On any given day, it cannot make more than 800 casual pairs of shoes. Each pair of casual shoes needs 2 units of labor, while each pair of dress shoes needs 3 units of labor.

The factory has 2,400 units of labor available daily. Each pair of casual shoes earns a profit of $15, while each pair of dress shoes earns a profit of $20. How many pairs of each type should the factory make each day?

(*Through Simplex LP Solver model, the answers for the decision variables are 600 casual shoes and 400 dress shoes)

*Important from here down* - This assignment continues analyzing Imelda's shoe factory. To grow her business, in the long run, Imelda is considering two options:

Option A: She can hire 40 more units of labor daily at the cost of $4.50 per unit.

Option B: She can invest in technology and increase the daily total capacity by 50 pairs of shoes. This investment has a one-time cost of $50,000. Applying a straight line amortization schedule over one year (250 working days), Imelda finds the daily cost of this investment to be $200.

Which option is better?

Under Option A:
Net impact =
Change in production:

Under Option B:
Net impact =
Change in production:

Suppose labor costs $5 per unit and the new technology has to be amortized over 6 months. What should Imelda do?

Ignoring the questions above, use SolverTable to discuss the effects of extending labor on the Objective function, when each unit of additional daily labor costs $4.50. Include a well-formatted table as Exhibit A. What would be your recommendation to Imelda?

Ignore the questions above. Imelda does not want more than 40% of the produced shoes to be casual shoes. Write down this constraint, so that the resulting model is still linear.

Reference no: EM131839289

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