Determining minimization of costs

Reference no: EM1315609

Suppose that Hump Ridge Company produces and sells two products, x and z, and that its total cost is given by

C = 4x² + 8z² - 2xz

Where x is its output per hour of the first product and z is its output per hour of the second product. The company has contracted with manufacturers to produce a total of 40 units each hour, but any mix of x and z is acceptable.

a) If the company wants to minimize its costs (without violating its commitments), how many x and z should it produce per hour?

b) What does λ equal? What does it mean?

c) If Hump Ridge Company is offered by a buyer $119.50 for one of its products but to make the product, Hump Ridge would have to stretch its total output to 41 units per hour, should Hump Ridge accept the offer or not? Explain.

Reference no: EM1315609

Questions Cloud

Creating the program : Develop a class named Book which holds a stock number, title, author, price, and the number of pages for a book. Involve a method which sets all the data files and another which prints the values for each data field.

Fitting of orthogonal polynomial regression model : What conclusions can you draw about the nature of the relationship between anxiety and exam performance?

Objective type questions on cost of capital : Objective type questions on cost of capital and capital budgeting and rule states that a typical investment project with an IRR that is less than the required rate should be accepted

Which of the following is an internal source of funds : Multiple Choice questions on stocks and bonds - Which of the following is an internal source of funds?

Determining minimization of costs : Suppose that Hump Ridge Company produces and sells two products, x and z, and that its total cost is given by-What does λ equal? What does it mean?

Determining confidence interval for average weights : Determine 80% confidence interval for average weights of Allen's hummingbirds in study regions. Determine the margin of error?

Stocks and bonds and risk analysis : Stocks and bonds and risk analysis multiple choice questions - the market allocates capital to companies based on

Multiple regression models using spss : Set up dummy coded dummy variables to contrast each of the other groups to Group 2, medium Anxiety; run a regression to predict exam performance (Y) from these dummy coded dummy variables.

Find level of production : What is the optimal level of production of wine decanters? Verify that this level of output maximizes not minimizes profit

User Account

All Pages