Problem 1 (Hint: Refer to the example: Great Threads fixed-cost model) XYZ Manufacturing Company produces three types of expresso machines: Grade-A model, Grade- B model, and Grade C model. The Grade-

  

Problem 1 (Hint: Refer to the example: Great Threads fixed-cost model) XYZ Manufacturing Company produces three types of expresso machines: Grade-A model, Grade- B model, and Grade C model. The Grade-A model is sold at a unit price of $750 per unit; Grade-B model is sold at $600 per unit; Grade-C model is sold at $450 per unit. XYZ requires 25lb of steel and 5 labor hours to manufacture a Grade-A machine requires, 22lb of steel and 4 labor hours for a Grade-B machine, and 20lb of steel and 3 labor hours for a Grade-C machine. A total of 6000lb of steel and 1500 hours are available. If any Grade-A machine is produced, an equipment cost of $20,000 is incurred; if any Grade-B machine is produced, an equipment cost of $18,000 is incurred; if any Grade-C machine is produced, an equipment cost of $15,000 is incurred. a) What is the effective capacity for each model of expresso machine, respectively? b) In the optimal solution, which type(s) machine will be manufactured? What is the optimal production quantity? What is the optimal profit? Problem 2 (Hint: Refer to the example: Madison Pricing model) A Wisconsin-based brewing company sells beer in cases to grocery stores and restaurants in Wisconsin, Minnesota, and Illinois. Starting in Oct 2017, the company has been promoting a new flavored beer. The unit cost of each case of beer is $30. The price and sales quantity in the last six months are listed below. Price ($) Month Oct ??? Dec Jan Feb | Sales Qty (cases) 1000 720 1240 1160 700 Mar 640 After estimating the relationship between demand and price, the company wants to decide the optimal price to maximize its profit.

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Problem 1 (Hint: Refer to the example: Great Threads fixed-cost model) XYZ Manufacturing Company produces three types of expresso machines: Grade-A model, Grade- B model, and Grade C model. The Grade-
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