2) Crashcar Enterprises makes Trailing Arms and Panhard Bars.
A pair of Trailing Arms requires 3 feet of steel rod stock, 4 rod ends,
4 hours of labor to machine and assemble.
A Panhard Bar is made using 3 feet of steel rod, 2 rod ends, and 1 hour
These resources must be arranged for in advance of actual production.
next week, they have available 180 feet of steel rod, 160 rod ends, and
College students working part time provide the labor, as needed, for
The correct type of steel rod is available to Widget at $1/foot.
Widget has recently converted their plant from military aerospace work.
present stock of rod ends are FAA approved MilSpec unobtainium, and
purchased for $1,475.80 each. The same rod ends are readily available
surplus sources for $5.00 apiece.
On the advice of their chief accountant, overhead is charged to all
at $5.00 per direct labor hour.
A pair of Trailing Arms sells for $73.00 FOB Widget, while a Panhard
sells for $38.00.
At these prices, they have a stable market slightly exceeding their
In fact, their pricing is so attractive that Blind Hog Motorsports has
signed a contract to purchase 25 pairs of Trailing Arms per week.
As a profit-oriented enterprise, how many of each product ought they
and sell next week?
1. Name the two main decision variables
2. What is the formula for total revenue?
3. Name the four main
constraints (other than
4. Which constraint(s) are <=, which are >=?
5. What numbers make uo the Right Hand Sides of the four constraints?
6. What formulas make up the Left Hand Sides of
the four constraints?
7. What role does overhead play in this problem?
8. What are the unit costs of the resources that must be paid for?
9 What is the formula for total variable cost?
10. What is the formula for total contribution?
Once you have set up and solved the problem without supplementary
and examined the sensitivity analysis, then:
11. Add a column for supplementary variables
12. Change the total cost formula to refer to the supplementary
13. Modify the solver setup to include the supplementary variables and
14. Solve the problem with supplementary variables and
15. Compare the two
What happens to profit if you have to start paying the college students
$7 per hour?
Turn in a printout of the main page, answer report, and sesnitivity
report without supplementary variables. The
main page(s) must be printed with grid lones and row/column headers;
these are optional for the other pages.
For extra credit also turn in the corresponding pages
supplementary variables. Write a short paragraph on the bottom of
sensitivity report about what happens to profit if you have to start
paying the college students
$7 per hour.