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Question: question 1 a sudden increase in the demand for smoke...

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Question 1: A sudden increase in the demand for smoke detectors has left Acme A larms with insufficient capacity to meet demand. The company has seen monthly demand for its electronic and battery-operated detectors rise to 20,000 and 10,000, respectively; and Acme wishes to continue meeting demand. Acmes produ shipping. The relevant quantitative data on production and prices are summarized below. ction process involves three departments: fabrication, assembly, and Monthly Hours Hours/Unit Hours/Unit (Electronic) (Battery) Department Fabrication Assembly Shipping Variable cost/unit Retail price Available 2000 4200 2500 0.15 0.20 0.10 $18.80 $29.50 0.10 0.20 0.15 $16.60 $28.00 The company also has the option to obtain additional units from a subcontractor, who has offered to supply up to 20,000 units per month in any combination of electronic and battery-operated models, at a charge of $21.50 per unit. For this price, the subcontractor will test and ship its models directly to the retailers without using Acmes production process. a. What are the optimal profit and corresponding make/buy levels? (Fractional quantity decisions are acceptable because this is a planning model.) [20 points) b. Suppose Acme is able to increase its fabrication capacity by 10%. How will the optimal profit and corresponding make/buy mix change? [10 points)

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