Burger Office Equipment Co. produces two types of desks: standard and deluxe. Deluxe desks have oak tops and more expensive hardware and require additional time for finishing and polishing. Standard desks require 80 square feet of pine and 10 hours of labor, while deluxe desks require 60 square feet of pine, 18 square feet of oak, and 16 hours of labor. For the next week, the company has 5,000 square feet of pine, 750 square feet of oak, and 400 hours of labor available. Standard desks net a profit of $150, while deluxe desks net a profit of $320. All desks can be sold to national chains such as Staples or Office Depot. a) Develop a linear optimization model to determine how many of each the company should make next week to maximize profit contribution.
b) Implement your model on a spreadsheet and find an optimal solution.
c) Explain the reduced costs associated with standard desks.
d) What constraints are binding? Explain how the shadow price can be used to make decisions that will improve profitability.
e) If 25% of the oak is deemed to be cosmetically defective, how will the optimal solution be affected?
f) The shop foreman is suggesting that his workforce be allowed to work an additional 100 hours at an overtime premium of $6/hr. Is this a good suggestion? Why or why not?