BUSI 354
Assignment – Linear Programming
Kaplan Computers manufactures high end computer systems for the graphics design industry. At
the present time, the company makes three computers with the following characteristics:
Unit selling price
Unit variable cost
Computer 1
$12,000
7,000
Computer 2
$11,000
8,500
Computer 3
$10,000
8,000
The manufacture of the computers requires three major activities during their assembly. There is
limited capacity for each resource. The following table shows the amount of each resource
consumed by each computer and the capacity available of that resource.
Resource A
Resource B
Resource C
Computer 1
3
5
8
Computer 2
4
6
3
Computer 3
6
2
2
Capacity
24,000
36,000
32,000
Additional resources are available, but need to be purchased in 1,000 unit increments.
Required:
1. Assume that demand for each product exceeds the capacity available. Choose a
production plan that maximizes contribution.
2. Assume that, for marketing purposes, Kaplan needs to manufacture at least 300 units of
each product. Choose a production plan that maximizes contribution.
3. Refer to the situation as describe in part 2. By how much would the contribution increase
if an additional unit of Resource A became available?
4. Refer to the situation as described in part 2. You can purchase extra units of Resources A,
B and C as follows:
Resource A
Resource B
Resource C
Amount Available
3,000
2,000
1,000
Cost per 1,000 units
$22,000
$250,000
$625,000
How much of each resource should Kaplan acquire? By doing so, what is the incremental
contribution that can be obtained? What quantity of each computer will now be made?
5.
In addition to the extra resources available as described in part4, a different supplier has
offered to supply an additional 1,000 units of Resource C, at a cost of $750,000. Should
Kaplan accept the offer or not? You must biuy all 1,000 units or none at all. Provide
quantitative support.
