Harkin Electronics is planning its production next quarter for its two product lines: relays and capacitors. The profit contribution is $250 for a case of relays and $200 for a case of capacitors. Three resources limit how much of each product the company can generate: labor, stamping capacity and testing capacity. Next quarter 80,000 labor hours will be available; a case of relays needs 200 labor hours and a case of capacitors needs 150. The stamping machine will be available for 1,200 hours next quarter and a case of relays needs 4 hrs on the stamping machine and a case of capacitors requires 2 hrs. Relays need 3 hours of testing per case and capacitors need 5. The testing machine will be accessible for 2,000 hrs next quarter.
a) Answer the given questions:
• For which resources, would you consider providing additional units? Why?
• If you excluded a resource, why did you prohibit it?
• For those resources for which you would add additional units, what is the range on the right-hand side values for the shadow prices to remain applicable?
b) Now assume that there is a requirement that Harkins must generate at least 40% cases of relays. Resolve below with this additional information.
• To maximize the total profit next quarter, how many cases of relays and capacitors must Harkin Electronics generate during that period? If your answer is in fractional units of cases that are acceptable – do not round to whole number of cases.
• How much profit will outcome?