Exhibit 0

A B C D
1 Producing for Profit: Data
2 Financial Data
3 Product: Hyper PDA Zeon PDA
4 Material cost ($/set) $ 260.00 $ 190.00
5 Labor cost ($/set) $ 20.00 $ 30.00
6 Overhead Charges ($/day) $ 1,000.00
7 Selling Price ($/set) $ 300.00 $ 250.00
8
9 Operational Data
10 Dedicated Resources
11 Circuit Board capacity (sets/day) 70 50 Maximum
12 Shared Resources Available / Day
13 Screen Construction Time (hours/set) 1 2 120
14 Case Installation Time (hours/set) 1 1 96

Data
 Exhibit 1
A B C D E
1 Producing for Profit: Model
2 Financial Data
3 Product: Hyper PDA Zeon PDA
4 Material cost ($/set) $ 260.00 $ 190.00
5 Labor cost ($/set) $ 20.00 $ 30.00
6 Overhead Charges ($/day) $ 1,000.00
7 Selling Price ($/set) $ 300.00 $ 250.00
8
9 Operations Data
10 Dedicated Resources
11 Circuit Board capacity (sets/day) 70 50 Maximum
12 Shared Resources Available / Day
13 Screen Construction Time (hours/set) 1 2 120
14 Case Installation Time (hours/set) 1 1 96
15
16 Model
17 Decision Variables: Sets/day 70 25
18
19 Contribution Margin ($/set) $ 20.00 $ 30.00
20 Maximum
21 Total Profit ($/day) $ 1,150.00
22
23 Resource Allocation Total Required Excess Leftover
24 Screen Construction Time (hours/set) 70 50 120 0
25 Case Installation Time (hours/set) 70 25 95 1
26
27 Formulas Explanation
28 B19. =B7-B4-B5 copied to C19 Margin = Price - Material Cost - Labor Cost
29 D21. =SUMPRODUCT(B19:C19,B27:C27)-D6 Profit = Sum of Margins *Quantities - Overhead
30 B24. =B13*B$17 copied to C24, B25:C25 Resource time Required for each product
31 D24. =B24+C24 copied to D25 Total resource time required
32 E24. =D13-D24 copied to E25 Excess Capacity = Available - Utilized
33
34
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36 Maximize total profit
37
38
39
40 By determining product quantities to produce
41
42 Within capacity constraints
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44
45
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47
48
49 Assume linearity and nonnegativity
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51
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58
Model
 Exhibit 2

Microsoft Excel 15.30 Answer Report

Worksheet: [s02 Producing for Profit.xlsx]Model
Report Created: 94//18 00:50:52
Result: Solver found a solution. All constraints and optimality conditions are satisfied.
Solver Engine
Engine: Simplex LP
Solution Time: 1.005655 Seconds.
Iterations: 3 Subproblems: 0
Solver Options
Max Time 100 sec, Iterations 100, Precision 0.000001
Max Subproblems Unlimited, Max Integer Sols Unlimited, Integer Tolerance 5%, Solve Without Integer Constraints, Assume NonNegative

Objective Cell (Max)

Cell Name Original Value Final Value
$D$21 Total Profit ($/day) Maximum $ 1,150.00 $ 1,150.00

Variable Cells
Cell Name Original Value Final Value Integer
$B$17 Decision Variables: Sets/day Hyper PDA 70 70 Contin
$C$17 Decision Variables: Sets/day Zeon PDA 25 25 Contin

Constraints
Cell Name Cell Value Formula Status Slack
$D$24 Screen Construction Time (hours/set) Total Requi 120 $D$24<=$D$13Binding 0
$D$25 Case Installation Time (hours/set) Total Required 95 $D$25<=$D$14Not Binding 1
$B$17 Decision Variables: Sets/day Hyper PDA 70 $B$17<=$B$11Binding 0
$C$17 Decision Variables: Sets/day Zeon PDA 25 $C$17<=$C$11Not Binding 25

Answer Report 1
 Exhibit 3

Microsoft Excel 15.30 Sensitivity Report

Worksheet: [s02 Producing for Profit.xlsx]Model
Report Created: 94//18 00:50:53

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$B$17 Decision Variables: Sets/day Hyper PDA 70 5 20 1E+030 5
$C$17 Decision Variables: Sets/day Zeon PDA 25 0 30 10 30

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$D$24 Screen Construction Time (hours/set) Total Requi 120 15 120 2 50
$D$25 Case Installation Time (hours/set) Total Required 95 0 96 1E+030 1

Sensitivity Report 1
 Exhibit 4

Producing for Profit: Model

a. Production Plan:
Produce 70 Hypers and 25 Zeons for total profit of $1150

b. Resource Allocation: Product

Hyper Zeon Total Units Slack
Resource: Hyper circuit board 70 0 70 sets 0
Resource: Zeon circuit board 0 25 25 sets 25
Resource: Screen construction time 70 50 120 hours 0
Resource: Case assembly time 70 25 95 hours 1
Bottlenecks are Hyper circuit board and screen construction

c. Increase in Hyper's profit margin by $20 < infinity, the allowable increase, so the solution (70, 25) will not change
but total profit will increase by ($20)(70) = $1400
Decrease in contribution margin by $10 > $5 allowable decrease, so the solution will change.
To find new solution, rerun Solver: Hypers = 20, Zeons = 50, total profit = $700

d. If Zeon's price increases by $10 (the allowable increase), the solution will change to (20, 50) for profit = $1400

e. No effect: We need only 25 Zeon circuit boards, so reducing the capacity to 30 circuit boards will have no effect on the solution

f. Reduced Cost = 5. If Hyper's circuit board capacity increases by 1, we will make one more Hyper, but must reduce half a Zeon
(to stay within the available screen construction time), so the net effect is to increase profit by $20 - (1/2)($30) = $5
which is the Reduced Cost

g. An extra hour of overtime in screen construction department will permit producing extra half Zeon
(not more Hyper, due to circuit board capacity limitation) which would yield (1/2)($30) = $15/hour, the Shadow Price
up to 2 more hours (the allowable increase). Beyond that, need to resolve and the resultingshadow price will decrease (to $10/hour)
After 2 hours, case installation becomes bottleneck too and we start trading off hypers vs. zeons, which leads to shadow price of $10/hr\

h. Work station breakdown in the screen department means losing 6 hours < 50 hours of allowable decrease
so the shadow price $15/hour will not change. Profit will decrease by ($15)(6) = $90. Zeon's production will go down by 3.

i. The decrease of 6 hours is more than the allowable decrease. So we need to resolve it,
which gives 60 Hypers, 30 Zeons and Profit = $1100

j. If Falcon requires 1 Zeon circuit board and 3 hours of touch screen time, the value of resources required to produce
one Falcon will be ($0)(1) + ($15)(3) = $45, which is more than $42 profit, so do not make any Falcons.

k. In launching a new product, in addition to resource requirements and profitabilty, one should also consider
the advantage of being innovative in the market, and uncertainty about the customer demand, competitors' response, etc.

Answers