Question

Boise Lumber has decided to enter the lucrative prefabricated housing business. Initially, it plans to offer three models: standard, deluxe, and luxury. Each house is prefabricated and partially assembled in the factory, and the final assembly is completed on site. The dollar amount of building material required, the amount of labor required in the factory for prefabrication and partial assembly, the amount of on-site labor required, and the profit per unit are as follows.

	Standard Model	Deluxe Model	Luxury Model
Material	$6,000	$8,000	$10,000
Factory Labor (hr)	240	220	200
On-Site Labor (hr)	180	210	300
Profit	$3,400	$4,000	$5,000

For the first year's production, a sum of $8,200,000 is budgeted for the building material; the number of labor-hours available for work in the factory (for prefabrication and partial assembly) is not to exceed 215,000 hr; and the amount of labor for on-site work is to be less than or equal to 234,000 labor-hours. Determine how many houses of each type Boise should produce to maximize its profit from this new venture. (Market research has confirmed that there should be no problems with sales.)

standard model	houses
deluxe model	houses
luxury model	houses

Answer 1