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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 produce: labor, stamping capacity, and testing capacity. Next quarter 80,000 labor hours will be available; a case of relays requires 200 labor hours and a case of capacitors requires 150. The stamping machine will be available for 1,200 hours next quarter and a case of relays requires 4 hours on the stamping machine and a case of capacitors requires 2 hours. Relays require 3 hours of testing per case and capacitors require 5. The testing machine will be available for 2,000 hours next quarter.
Answer the following questions:
- For which resources, would you consider providing additional units? Why?
- If you excluded a resource, why did you exclude 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 valid?
b) Now suppose that there is a requirement that Harkins must produce at least 40% cases of relays. Resolve below with this additional information.
1) To maximize total profit next quarter, how many cases of relays and capacitors should Harkin Electronics produce during that period? If your answer is in fractional units of cases that is acceptable - do not round to whole number of cases.
2) How much profit will result?