Lowell incorporated manufactures two types of jackets: polyester and leather. production times, total production time available, and production costs for each type of jacket are given in the table below:
production time
polyester leather time available
cutting 0.70 1.2 700
assembly 0.58 0.75 500
finishing 0.85 0.85 650
inspection/packaging 0.10 0.25 125
production costs (in dollars) 40 80
management has determined that demand for each type of jacket is as follows:
demand for polyester jackets: 3000 – 15pp
demand for leather jackets: 2000 – 5pl
where pp is the price for polyester jackets and pl is the price for leather jackets.
essay questions
1. develop a profit maximization nonlinear model to determine how many polyester jackets and how many leather jackets the company should produce.
2. what is the total contribution profit expected with your solution to question 1?
3. what should the unit sale price for polyester jackets be? and the unit sale price for leather jackets?
4. upon further review, management determines that production costs will increase 5% for each type of jacket in the upcoming year. revise your profit maximization nonlinear model to determine how many polyester jackets and how many leather jackets the company should produce.
5. what is the total contribution profit expected with your solution to question 4? and the percentage change in contribution profit? is the change in contribution profit a decrease or an increase?
6. based on your results to question 4, what should the unit sale price for polyester jackets be? and for leather jackets?