Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
12th Edition
ISBN: 9780134741062
Author: Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman
Publisher: PEARSON
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Chapter D, Problem 12P
A
Summary Introduction
Interpretation: the amount paid for extra hour of cutting time, for sewing time, for material would be calculated
Concept Introduction:Objective functions are the linear functions and the equalities or inequalities are the constraints. It is the condition of an optimization of problem.
B
Summary Introduction
Interpretation:the range of right hand side values would be determined for cutting constraints and the material constraints.
Concept Introduction:Objective functions are the linear functions and the equalities or inequalities are the constraints. It is the condition of an optimization of problem.
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The shadow price is calculated to be P4.00 for a less than or equal to constraint in a maximization LP problem with the optimal objective function value of z = 25, this means that
a.if the coefficient of the objective function is increase by 1 then the RHS for that constraint must be increased by 4.
b. if the RHS for that constraint is increased by 4 units then the optimal objective function value will become 26
c.if the coefficient of the objective function is increase by 4 then the RHS for that constraint must be increased by 1.
d.if the RHS for that constraint is increased by one unit then the optimal objective function value will become 29
1. If constraint has a shadow price of $6, Right-Hand-Side (RHS) is 12, allowable increase is 2, allowable decrease is 4. How would objective function change if the RHS of this constrains changes from 12 to 9?
Answer___________
(1) When chef Paolo prices his speciality ‘pizza-n-all’ meal at £25, he sells 20 meals a day.
When he prices his pizza meal at £22, he sells 21 meals a day.
Suppose Paolo reduces his price from £25 to £22. Explain the impact of the price reduction on the revenue he receives from the first 20 meals he sells.
Total Revenue – Price X Quantity.
Revenue @ £25 = £25 X 20 = £500.
Revenue @ £22 = £25 X 20 = £440
The impact of the price reduction is a reduction in total revenue of £60 (-12%) over the first 20 meals that he sells.
Calculate the additional revenue generated from the additional meals he sells when he lowers his price to £22.
Total Revenue = Price X Quantity.
Total Revenue @ £22 = £22 X 21 = £462.
Additional Revenue = Revenue @ £25 – revenue @ £22 = £500 - £462 = -£38.
Calculate the marginal revenue Paolo receives from the 21st meal. How does that amount relate to the amounts you calculated in (a) and (b)? (3%)
Suppose Paolo reduces his price from £25 to £22. Explain…
Chapter D Solutions
Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
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