Scenario 6: The ABC Corporation management has hired a cost accountant to make some recommendations regarding the cost allocation of labor used to produce air cleaners. The average wages of personnel performing particular processes are presented in the table below.

Assembly

Wiring

Packaging

Material Handling

$12.75

$14.50

$9.25

$13.50

Additional investigation into manufacturing costs reveal that at least 15% of the man-hours must be allocated to performing material handling tasks, at least 45% must be allocated to wiring and assembly and at least 30% must be allocated to wiring and packaging. If a block of 50 man-hours is analyzed answer the following questions:

Formulate and develop a LP model to find the best combination of labor hours and that yields the lowest cost. Feel free to use the Excel template provided or the corner point method.

The prior analysis revealed a flaw in the data; the accountants ignored the constraint that a minimum of twelve (12) man-hours had to be allocated to Wiring. Formulate and develop a LP model accounting for this new constraint.

The prior analysis revealed another flaw in the analysis; the accountants failed to identify that packaging is over allocated thus they want to add another constraint stating that packaging must be allocated a maximum of ten (10) man-hours.

Formulate and develop a LP model accounting for this new constraint.