Strategic Decision with Management Sciences

Read the following case and answer the questions that follow it.

Ruwais Furniture Manufacturing (RFM) makes 2 products: Antique wood chairs and Modern wood chairs.

For every Antique chair, RFM makes a profit of 22 AED. For every Modern chair, a profit of 15 AED.

RFM uses 2 resources to make its chairs: oak wood and pine wood. The company has 450 meters of oak wood and 420 meters of pine wood available.

Total labour time available is 300 hours

To make 1 Antique wood chair, 3 meters of oak and 2 meters of pine are required. It takes 2 hours labour time to make one antique chair.

To make 1 Modern wood chair, 2 meters of oak and 1 meters of pine are required. It takes 1.5 hours of labour time to make one modern chair.

To determine the optimal solution (number of each product to be produced and the profit), start by formulating the above as an LP problem:

Answer:

I. Variables:

II. Objective function

III. Constraints

IV. To solve this LP problem, formulate it in Excel:

V. Using Excel Solver, what is the optimal solution?

VI. Produce the Sensitivity report. If an additional 20 hours of labour available, what will be the new profit?

VII. Explain the properties of a linear programming model.

VIII. What is the purpose of the Sensitivity report in solving a linear programming problem?