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Lockbourne Airline Case Solution
Romans Food Market, located in Saratoga, New York, carries a variety of specialty foods from around the world. Two of the stores leading products use the Romans Food Market name! Romans Regular "offee and Romans #e"af "offee. These coffees are $lends of %ra&il %ra&ilian ian Natura Naturall and "olom$ "olom$ian ian Mild Mild coffee coffee $eans, $eans, which which are purcha purchased sed from from a distri$utor located in New York "ity. %ecause Romans purchases large 'uantities, the coffee $eans may $e purchased on an as(needed $asis for a price )*+ higher than the market price the distri$utor pays for the $eans. The current market price is *.- per pound for %ra&ilian Natural and *./0 per pound for "olom$ian Mild. The compositions of each coffee $lend are as follows!
.!. Romans sells the Regular $lend for 1./* per pound and the #e"af $lend for -.-* per pound. Romans would like to place an order for the %ra&ilian and "olom$ian coffee $eans that will ena$le the production of )*** pounds of Romans Regular coffee and 2** pounds of Romans #e"af coffee. The production cost is *.3* per pound for the Regular $lend. %ecause of the e4tra steps re'uired to produce #e"af, the production cost for the #e"af $lend is ).*2 per pound. 5ackaging costs for $oth products are *.02 per pound. Formulate a linear programming model that can $e used to determine the pounds of %ra&ilian Natural and "olom$ian Mild that will ma4imi&e the total contri$ution to profit. 6hat is the optimal solution and what is the contri$ution to profit7
SOLUTION:
8et
%R
9
pounds of %ra&ilian $eans purchased to produce Regular
%#
9
pounds o off %r %ra&ilian $e $eans purchased to to pr produce #e #e"af
"R
9
pounds of "olom$ian $eans purchased to produce Regular
"#
9
pounds o off "o "olom$ian $e $eans pu purchased to to pr produce #e #e"af
Type of Bean %ra&ilian "olom$ian
Cost per pound ($) ).)*:*.-; 9 *.2) ).)*:*./0; 9 *./30
Total revenue 9 1./*:%R < "R; < -.-*:%# < "#;
Total cost of $eans 9 *.2):%R < %#; < *./30:"R < "#;
Total production cost 9 *.3*:%R < "R; < ).*2:%# < "#;