Reference no: EM13976271

Semicond is a small electronics company that manufactures tape recorders and radios. The per-unit labor costs, raw materials, and selling price of each product are given in Table 1. On December 1, 1997, Semicond has available raw material that is sufficient to manufacture 100 tape recorders and 100 radios. On the same date, the company’s balance sheet is as shown in Table , and Semicond’s current ratio is 20,000/10,000 = 2. Tape Recorder Radio Selling Price $100 $90 Labor Cost $50 $35 Raw Material Cost $30 $40 Assets Liabilities Cash $10,000 Accounts Receivable $3,000 Inventory outstanding* $7,000 Bank Loan $10,000 Semicond must determine how many tape recorders and radios should be produced during December. Demand is large enough to ensure that all goods produced will be sold. All sales on credit, however, and payment for goods produced in December will not be received until February 1, 1998. During December, Semicond will collect $2000 in accounts receivable, and Semicond must payoff $1000 of the outstanding loan and a monthly rent of $1000. On January 1, 1998, Semicond will receive a shipment of raw material worth $2000, which will be paid for on February 1, 1998. Semicond’s management has decided that the cash balance on January 1, 1998 must be at least $4000. Also, Semicond’s bank requires that the current ratio (assets/liabilities) at the beginning of January be at least 2. In order to maximize the contribution to profit from December production, (revenues to be received) – (variable production costs), what should Semicond produce during December? a) Formulate the linear programming model for the problem.