Chapter D, Problem 1DQ

Summary Introduction

Interpretation: The information required to decide whether the management needs to rent a warehouse is to be determined. Also, the ways in which the linear programming model can be helpful is to be determined.

Concept Introduction:When there are more than two variables (behaving linearly) in a problem in which an objective function is to be optimized, the problem can be solved through linear programming. The solution will also indicate the critical and non-critical variables (called constraints). Thus the impact of any variation of the critical constraints can also be assessed.

Answer to Problem 1DQ

The inferenceof not taking another warehouse on rent (at whatever rate) can be derived from this model.

Explanation of Solution

Given information:

1. Three equal to or less than constraints.
2. The two critical constraints of raw material and labour costs.
3. Availability of a warehouse at cheap rates.

1. The management needs to know whether storage space is a binding constraint. It is not, because the intersection of labour hours and raw materials is the optimal solution.