Discussion
Consider the in-class exercise.
M&D chemicals produces two products that are sold as raw
materials. Management has specified that the combination
production for product 1 and 2 must total at least 350
gallons. Separately, a major customer’s order for 125
gallons of product 1 must also be satisfied. Product 1
requires 2 hours of processing time per gallon while
product 2 requires 1 hour of processing time per gallon,
and for the coming month, 600 hours of processing time
are available. M&D’s objective is to satisfy the above
requirements at a minimum total production cost.
Production costs are $x per gallon for product 1 and $y per
gallon for product 2.
Now set a range of values for x and y; generate a series of sensitivity reports and analyze the trend from your values entered. What are some of the conjectures you would derive?