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Dear tutor:
116 A company makes two products, X and Y, using the same type of direct labour. Production capacity per period is restricted to 60,000 direct labour hours.The contribution per unit is$8 for Product X and $6 for Product Y. The following constraints apply to production and sales:
X?10,000 (Sales demand for Product X)
y?12,000 (Sales demand for Product Y)
5x+4y?60,000 (Direct labour hours)
The contribution-maximising output is to produce and sell 10,000 units of Product X and 2,500 units of Product Y.
What is the shadow price per direct labour hour and for how many additional hours of labour does this shadow price per hour apply?
I want to know how to calculate this question?why make the “5x+4y=60001?Thank you for your help.The shadow price is the most extra that they would be prepared to pay for 1 extra hour of the limited resource (which is equal to the extra contribution that would be generated from having 1 extra hour). If there was 1 extra hour then the labour constraint would increase from 60,000 to 60,001 hours.
This is all explained in my free lectures on linear programming (and you cannot expect me to type out my lectures again here 🙂 )
The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.
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