Simplex Method

Business A decides to set-up a toy factory to manufacture toy cars and lorries.  From the market research done, the following information is established:

  • Each toy car sells at Ksh.45
  • Each toy lorry sells at Ksh.80
  • Each car requires 5 hours to be machined.
  • Each lorry requires 12 hours to be machined.
  • The machining equipment is only available for 400 hours per production period
  • Each car requires 10 hours to be passed through the finishing process
  • Each lorry requires 15 hours to be passed through the finishing process
  • The finishing team is only available for 450 hours per production period
  1. Formulate the problem.
  2. Using simplex method provide the maximum numbers of cars and lorries that can be generated to maximize profit.
  3. Discuss the characteristics of negotiable instruments.
  4. If the finishing work costs Ksh.200 per hour and the management decide to offer 2 more hours for finishing, what will be your advice.

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