Snako oil has decided as a matter of policy to always make Zoom and Slug at the cheapest possible cost per gallon, even if this means having more ingredients left over to use next period rather than getting a little more short-term money this period with a more expensive mix that would use up more of the available materials.
Thus, from now on, every gallon of Zoom will have exactly
.2 gallon of DiethylMulehide
.5 gallon of Gruntane, and
.3 gallon of Hoctane
Every gallon of Slug will have exactly
.7 gallon of DiethylMulehide
.1 gallon of Gruntane, and
.2 gallon of Hoctane
Note that this changes the problem from a variable-proportion blending problem to a simple resource allocation problem, which makes the spreadsheet layout quite different, and much simpler.
Write a cogent and businesslike memo to Snako management
them on how much Zoom and how much Slug to produce without violating
of the constraints listed above or in the problem statement in the
textbook (including the contracted amounts of each product). The
objective is still to
mazimize total contribution;
the difference is that there is no longer any flexibility about the
of ingredients in each grade of gasoline. Be sure to include a
accurate, and non-technical justification for whatever you recommend.
Also give a clear, quantitative and non-technical discussion of the implications for the production decision if the selling price of one or the other blend of gasoline were to increase or decrease due a change in market conditions. The manager studied LP a long time ago, and hired you because he doesn't want to study it again!
For extra credit also give a clear, quantitative and non-techincal discussion of the implications for the production decision if the cost of one or another ingredient were to increase or decrease. (You need three supplementary variables to do this.)
75% of the grade on this homework will be based on the memo. It should be single-spaced, in standard business memo form, using a standard 10 or 12 point font, and no more than one page in length. Memos that continue on to a second page, even for one line, will be graded zero!
Attach an Excel printout of the main page, answer report, and sensitivity report.
Hint: You can solve the problem using only two
variables, total zoom and total slug.
To do this, you need to calculate how much of each ingredient is used, as a function of how much of each product is made.
Constrain these to be less than or equal to resources, just like painting hours and assembly hours for widgets and gadgets.
For the extra credit you would need a solution
decision variables, a variable for each product and a supplementary
for each ingredient.
Then you can see the effect of price changes for ingredients
Solutions with more than five decision
(including supplementary variables) will be graded zero!!
If two students turn in papers that
show signs that one student copied from another, they shared files, or
both studentss copied from a common rough draft, both students will
grade of zero. I will not be the judge of who is the copier and
is the person being copied from whether willingly or negligently