PRODUCTION. Pacific Aerospace is one of four subcontractors producing computer-controlled electrical switching assemblies for the proposed NASA space station. Pacific has the capability to produce three types of systems in-house: the Pacific Aerospace Delta, Omega, and Theta. NASA needs hundreds of all three systems and will purchase whatever Pacific chooses to produce.
All assemblies contain the tiny modified X70686 computer chip that cost Pacific $500 to manufacture. Seven such chips are available daily. Other materials needed for the manufacture of the assembly cost $200 for the Delta, $400 for the Omega, and $300 for the Theta, but they are not considered in short enough supply to restrict production.
Each assembly must pass through a production center; it is then subjected to rigorous testing and quality control checks. The following table gives the relevant data for each assembly.
a. Formulate and solve for the optimal daily production schedule. Note that no Omega systems would be produced. Why not?
b. What is the minimum contract price that would initiate production of the Omega systems?
c. What is the minimum X70686 availability for which the solution in (a) remains optimal?
d. Suppose you have the option of improving the profit by instituting one of the following options. Which would be of most value to Pacific Aerospace?
i. Receiving, on a daily basis, six additional X70686 chips for $3100.
ii. Utilizing three extra production hours daily at a cost of $525 ($175/hr.)
iii. Utilizing one additional quality check hour daily at a cost of $200 ($200/hr.)