Use Solver to create a Sensitivity Report for, and answer

Use Solver to create a Sensitivity Report for, and answer the following questions:

a. Which of the constraints in the problem are binding?

b. If the company was going to eliminate one of its products, which should it be?

c. If 1,000 additional memory chips are available at the usual cost, should the company buy them? If so, how much would profits increase?

d. Suppose the manufacturing costs used in this analysis were estimated hastily and are known to be somewhat imprecise. Which products would you be most concerned about having more precise cost estimates for before implementing this solution?

e. Create a Spider Plot showing the sensitivity of the total profit to the selling price of each product (adjusting the original values by 90%, 92%, …, 110%). According to this graph, total profit is most sensitive to which product?

Question

Valu-Com Electronics manufactures five different models of telecommunications interface cards for PCs and laptops. As summarized in the following table, each of these devices requires differing amounts of printed circuit board, resistors, memory chips, and assembly.

The unit wholesale price and manufacturing cost for each model are as follows.

In its next production period, Valu-Com has 80,000 square inches of PC board, 100,000 resistors, 30,000 memory chips, and 5,000 hours of assembly time available. The company can sell all the product it can manufacture, but the marketing department wants to be sure the company produces at least 500 units of each product and at least twice as many FastLink cards as HyperLink cards while maximizing profit.

a. Formulate an LP model for this problem.

b. Create a spreadsheet model for this problem, and solve it using Solver.

c. What is the optimal solution?

d. Could Valu-Com make more money if it schedules assembly workers to work overtime?