Reference no: EM133039299

The Auto Company of America (ACA) produces four types of cars: subcompact, compact, intermediate, and luxury. ACA also produces trucks and vans. Vendor capacities limit total production capacity to at most 1,200,000 vehicles per year. Subcompacts and compacts are built together in a facility with a total annual capacity of 620,000 cars. Intermediate and luxury cars are produced in another facility with capacity of 400,000; and the truck/van facility has a capacity of 275,000. ACA's marketing strategy requires that subcompacts and compacts must constitute at least half of the product mix for the four car types. Profit margins, market potential, and fuel efficiencies are summarized below.

Type	Profit margin ($/vehicle)	Potential sales (in 000s)	Fuel efficiency (MPG)
Subcompact	150	600	40
Compact	225	400	34
Intermediate	250	300	15
Luxury	500	225	12
Truck	400	325	20
Van	200	100	25

The Corporate Average Fuel Efficiency (CAFE) standards require an average fleet fuel efficiency of at least 27 MPG. ACA would like to use a linear programming model to understand the implications of government and corporate policies on its production plans.

Using ampl:

1) What is the optimal annual profit for ACA?

2) How much would annual profit drop if the fuel efficiency requirement were raised to 28 MPG?