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Don't Drink And Drive Brewery (DDAD) produces beer and ale. Beer sells for $5.70 per barrel, and ale sells for $2.05 per barrel. Producing a barrel of beer requires 5 pounds of corn and 2 pounds of hops. Producing a barrel of ale requires 2 pounds of corn and 1 pound of hops. Operational costs are $0.25 for a barrel of beer and $0.10 for a barrel of ale. The brewery has 12,000 pounds of corn and 6,000 pounds of hops. DDAD wants to maximize its profit.
a) Find the optimal production plan that maximizes the profit. Write the solution. Binding Constraints:
b) What is (are) the bottleneck resource(s) for the brewery? Why? Shadow Price:
c) If additional corn is available at 1.25 $/pound, should DDAD purchase any? Why (not)? Reduced Cost:
d) What should be the minimum selling price of ale, so that its production becomes profitable? Please answer part d
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