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## Answers to Red Brand Canners Part II

1. Alternative Formulation:
First deIine the Iollowing additional variables:
w
C
weigh oI tomato grade C allocated to produce whole tomatoes (lbs),
j
C
weight oI tomato grade C allocated to produce tomato juice (lbs),
p
C
weight oI tomato grade C allocated to produce tomato paste (lbs).
The update Iormulation is then:
Maximize ((1.203.24)*100)/18)*(w
A
w
B
w
C
) ((0.363.60)*100)/20)*( j
A
j
B

j
C
) ((1.054.50)*100)/25)*( p
A
p
B
p
C
)
9w
A
6w
B
3w
C
_ 8(w
A
w
B
w
C
) w
A
- 2w
B
- 5w
C
_ 0 (whole tomatoes quality
constraint)
9j
A
6j
B
3j
C
_ 6(j
A
j
B
j
C
) j
A
- j
C
_ 0 (tomato juice quality constraint)
w
A
w
B
w
C
_ 800,000*18 (whole tomatoes production less than demand)
j
A
j
B
j
C
_ 50,000*20 (tomato juice production less than demand)
p
A
p
B
p
C
_ 80,000*25 (tomato paste production less than demand)
w
A
j
A
p
A
_ 600,000 (grade A tomatoes usage less than available amount)
w
B
j
B
p
B
_ 1,600,000 (grade B tomatoes usage less than available amount)
w
C
j
C
p
C
_ 800,000 (grade B tomatoes usage less than available amount)
w
A
, w
B
, w
C
, j
A
, j
B
, j
C
, p
A
, p
B
, p
C
_ 0

The new model solution puts all 800 thousand lbs. oI Grade C tomatoes into Paste (see

2. The income Irom selling the tomatoes is \$685,000 (Irom the Excel spreadsheet
solution). The cost oI the tomatoes used is \$0.18*3,000,000 \$540,000. The net
income is \$145,000.

3. First make sure to change the Iormatting oI the Shadow price column to allow Ior 3
decimal places. The shadow price Ior Grade A tomato supply is 27.1 cents/lb. and the
allowable increase is 200 thousand lbs. This means a purchase oI 80,000 lbs. at 25.5
cents/lb. should be undertaken

4 From the Sensitivity Report below, the shadow price on the Paste demand constraint is
\$0.024/lb and the allowable increase is 100 thousand lbs. The proposed increase is 3
thousand cases 25 lbs per case or 75 thousand lbs. which is within the allowable
increase. Red Brand would be willing to pay at most \$0.024x75 \$1.8 thousand.

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5. The suggested change will decrease the price oI Canned tomatoes by
\$0.48/18\$0.0267 per lb. The change impacts three coeIIicients at once (those oI