Question

In: Operations Management

A firm makes two products and Each und of costs $10 and sells for $40. Each unit of Z costs $5 and sells for $25

A firm makes two products and Each und of costs $10 and sells for $40. Each unit of Z costs $5 and sells for $25. If the firm's goal were to maximira profit, what would be the appropriate objective function?

Expert Solution

The correct answer is (c) $30Y + $20Z

Explanation: We have to use the Linear Programming technique to solve the problem.

Linear Programming is a mathematical technique that is used to achieve the best results or outcomes whose requirements are presented by a linear relationship. It is used to achieve the best outcomes that could be maximizing profit and minimizing the cost and the simplest way to perform optimization.

In the given problem, we need to maximize profit for two products, first, we will calculate profit for each product.

Profit = Selling price - Cost price

Profit for Product Y = $40 -$10 = $30

Profit for Product Z = $25 -$5 = $20

Let's consider, the total number of units produced of Product Y = Y

the total number of units produced of Product Z = Z

The maximum profit of a product = total profit * numbers of units produced.

So the total profit of Product Y = $30Y

the total profit of Product Z = $20Z

The firm's goal to maximize profit by Product Y and product Z

The objective function can be stated as, $30Y+$20Z

keosha answered 2 years ago

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