A firm can produce 2 types of a certain product, namely basic B and deluxe D. The estimated profit per unit is $ 10 basic and $ 15 deluxe.
The firm has 60 hours of labour available per day and 100 units of capital. Each unit of basic product B requires 2 hours of labour and 4 units of capital. Each unit of the de-luxe product D requires 4 hours of labour and 5 units of capital.
Labour and capital cannot be negative.
How much of each type of product should the firm produce in order to maximize profit?
- Define the objective function for a firm and the decision variables
- Define the constraints for the problem (constraint for labour and constraint for capital)
- Solve the problem with excel solver and find what is the optimal amount of B and D that maximize the profit and how much the profit is?