limiting factor

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November 18, 2015 at 1:51 pm #283610
pumulokrebby1992
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Limiting factor-
Linear programming….kindly assist me with the working for this question
Q1. MCQ
A company currently makes 2 products X and Y. both use material z which is limited supply and current production levels using the entire weekly supply. product X uses 5kg of Z per unit, product Y uses 5kg of Z per unit. Material Z is costing currently $3/kg and the shadow price for material Z has been calculated as $3.7/kg.
The supplier of material Z is prepared to increase the weekly supply by 10kg.
What is the extra amount that the company should prepare to pay for the extra material?
November 18, 2015 at 2:33 pm #283631
John Moffat
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I really do suggest that you watch our free lectures on linear programming!!
The shadow price is the most extra that will be paid (above the normal cost).
Therefore the most per kg that they are prepared to pay for Z is 3 + 3.70 = $6.70 per kg.
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