Eagle Holdings plc (Worth 7%) Learning Outcomes This assignment relates to the following Learning Outcomes: know, and describe examples of, the three components of a linear programming (LP) model, and formulate simple LP problems; solve linear programming problems (with ? constraints only) using the Simplex Method, interpret the solution, carry out a sensitivity analysis on the solution, and explain the solution in a way understandable to a layperson; apply a computer package (EXCEL Solver) to the solution of linear programming problem; Memo: To: XXXX Consultants From: Dr C. Jones, Managing Director, Eagle Holdings plc We are small company that manufactures tables and chairs (amongst other thing). We fabricate these from 1 metre wide mahogany sheets that we purchase by the linear metre. At this time my supplier can only supply up to 750 linear metres per week at £30 per metre. Each table requires 3 linear metres and each chair 1 linear metre (including waste – no salvage value). Each chair also requires a soft cushion. At present we can only purchase 500 cushions per week at a cost of £25 each. Other required hardware (brackets, nut, bolts, etc.) averages £45 per table and £25 per chair. There is no shortage of any of these components. We are able to sell the tables for £300 each and chairs for £150 each. The 10 craftsmen employed at Eagle earn £800 per week (including all benefits, e.g. pension). There is also £5000 per week in rent, rates, insurance etc. These are all fixed costs. Each table requires 1 hour of a craftsman’s time whereas a chair only requires 36 minutes. Each craftsman works 37.5 hours per week. Company policy mandates that the ratio of chairs to tables must be between 4 to 1 and 6 to 1. Required: I have recently been on the first module of a series, run by OR Society, on linear programming and I think this problem is suitable for this approach. Am I right? If I am, I instruct you to formulate this problem as an LP model?...
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