Reference no: EM132296047

The Food Max grocery store sells three brands of milk in half-gallon cartons-- its own brand, a local dairy brand, and a national brand. The profit from its own brand is $.97 per carton, the profit from the local dairy brand is $.83 per carton, and the profit from the national brand is $.69 per carton. The total refrigerated shelf space allotted to half-gallon cartons of milk is 36 square feet per week. A half-gallon carton takes up 16 square inches of shelf space. The store manager knows that each week Food Max always sells more of the national brand than of the local dairy brand and its own brand combined and at least three times as much of the national brand as its own brand.

In addition, the local dairy can supply only 10 dozen cartons per week. The store manager wants to know how many half-gallon cartons of each brand to stock each week to maximize profit.

a) Formulate a linear programming model for this problem.

b) If Food Max could increase its shelf space for half-gallon cartons of milk, how much would profit increase per carton?

c) If Food Max could get the local dairy to increase the amount of milk it could supply each week, would it increase profit?

d) Food Max is considering discounting its own brand to increase sales. If it were to do so, it would decrease the profit margin for its own brand to $.86 per carton but it would cut the demand for the national brand relative to its own brand in half. Should the store implement this price discount?