Mr. Smith used the following information to calc
Question # 00004216
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Updated on: 11/27/2013 11:04 PM Due on: 11/30/2013
Mr. Smith used the following information to calculate the profit coefficients for AquaSpas and HydroLuxes: pumps cost $225 each, labor costs $12 per hour, tubing costs $2 per foot. In addition to pumps, labor, and tubing, the production of AquaSpas and HydroLuxes consumes, respectively, $243 and $246 per unit in other resourses that are not in short supply. Using this information, Mr. Smith calculated the marginal profits of AquaSpas and HydroLuxes as: AquaSpas HydroLuxes Selling Price $950 $875 Pump Cost $225 $225 Labor Cost $108 $72 Tubing Cost $24 $32 Other Variable Costs $243 $246 Marginal Profit $350 $300 Howie's accountant reviewed these calculations and thinks Howie made a mistake. For accounting purposes, factory overhead is assigned to products at a rate of $16 per labor hour. Howie's accountant argues that because AquaSpas require nine labor hours, the profit margin on this product should be $144 less. Similarly, because HydroLuxes require six labor hours, the profit margin on this product should be $96 less. Who is right and why?
2. Are the following objective functions for an LP model equivalent? That is, if they are both used, one at a time, to solve a problem with exactly the same constraints, will the optimal values of X1 and X2 be the same in both cases? Why or why not? MAX: 2X1 + 3X2 MIN: 2X1  3X2
2. Are the following objective functions for an LP model equivalent? That is, if they are both used, one at a time, to solve a problem with exactly the same constraints, will the optimal values of X1 and X2 be the same in both cases? Why or why not? MAX: 2X1 + 3X2 MIN: 2X1  3X2

Rating:
5/
Solution: Mr. Smith used the following information to calc