Assignment 1

1. A)
Profit = Total Revenue Total Fixed Cost Total Variable Costs
0 = 700x 45 000 450x
0 = 250x 45 000
45 000 = 250x
X = 180
At the point of x = 180, profit is $0. We need to sell at least 180 units of this project to
make profit gain.
B)
Sales Forecast Profit = 700s 45 000 450s
Production Quantity Profit = 700q 45 000 450q
When solving for profit, you would just substitute whether you use sales forecast or
production quantity variables for profit earned. Using sales forecast will give you the profit you
earn after selling your sales forecast, whereas using production quantity will give you profit
earned from selling the wallets SPC produced.
C)
Using q = 350, our profit becomes $42,500.00, assuming that we sell all wallets
produced by SPC. This will only work when the sales forecast is greater than the production
quantity.
Using s = 400, our profit becomes $10,000.00, assuming that SPC only sells the wallets
that were forecasted. This will only work when sales forecasted is less than the production
quantity.
Using q = 350 and s = 400, we were unable to find a breakeven point because the profit
earned off of those values were too high. In order to find a breakeven point, we will need to set
lower s and q variables.
When s = 80, SPC should make 80 wallets because only 80 of them will be sold due to
the sales forecast. If SPC creates more wallets they are putting on more cost and will lose profit.
If they produce less, they wont have enough for the demands of the market and miss out on
potential profit.
When s = 300, SPC should make 300 wallets because it is the demand of the market. If
SPC produces less than 300 wallets, they will be missing out on potential profit. If they produce
more than the sales forecast, they will be taking on extra cost which will also take away from
their profits.


Question 2
Decision Variables
Let x = number of Body plus 100 produced
Let y = number of Body plus 200 produced

Max Profit, 371x + 461y
Constraints
8x + 12y <= 600
5x + 10y <= 450
2x + 2y <= 140
-0.25x + 0.75y >= 0
X, y >= 0

a) Using the following data used in the excel chart, to maximize profit, BFI must produce 50 units
of Body plus 100 and 16.67 units of Body plus 200.

b) The requirement to build at least 25% of the total production of Body plus 200 is taking away
from the profits. If there were no such restriction, there would be 60 Body Plus 100 and 10 Body
plus 200. The total profit would be $26870. It is a small change but if there was no restriction,
there would be an increase of profits by $636.67.

c) If the president believes that the capabilities of the Body plus 200 can sell more, I would suggest
keeping the 25% restriction and increase efforts in the hours of manufacturing. Since the
restriction already only makes a small difference, to build more profit using the same restriction
set by the president we need to extend the amount of hours building both products. If the hours
were to be extended, there are more units produced, thus creating more profit.



Question 3
Decision Variables
Let x = amount of truck 1 produced daily
Let y = amount of truck 2 produced daily

Maximize Profit, 300x + 500y
Constraints
1/800x + 1/700y <= 1
1/1500x + 1/1200y <= 1
X >= 200
x, y >= 0
In order to maximize profit, the company must produce 200 units of truck 1 and 525 units of truck 2. If
there was no such constraint of creating at least truck 1, the profit would be much higher. In this case,
our maximized profit daily will be $322 500.