Small Medium Large Minimum 14,000 6,200 2,600 Maximum 2

Klein Industries manufactures three types of portable  air compressors: small, medium and large, which have units profits of $20.50, $34.00 and $42.00, respectively.

The projected monthly sales are:

  Small Medium large
Minimum 14,000 6,200 2,600
maximum 21,000 12,500 4,200


The production process consists of three primary activities: bending and forming, welding and painting. The amount of time in minutes needed to process each product in each department is shown below:

  Small Medium Large Available time
Bending/forming 0.4 0.7 0.8 23,400
Welding 0.6 1.0 1.2 23,400
Painting 1.4 2.6 3.1 46,800


How many of each type of air compressor should the company produce to maximize profit?

(a)  Formulate and solve a linear optimization model using the auxiliary variables cells methods and write a short memo to the production manager explaining the sensitivity information.

(b)  Solve the model without the auxiliary variables and explain the relationship between the reduced costs and the shadow prices found in part A.


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