3 a firm has three types of wood products x x2 x3 each requires or pot
3. A firm has three types of wood products (X₁, X2, X3) each requires (or potentially requires) four
inputs: A B, C and D.
The profit contribution of each output is $20, $27 and $34.5, respectively.
a. The company's objective is to choose the product mix that maximizes its profit. Write out the
objective function and the constraints.
b. Find the profit-maximizing solution using EXCEL's Solver. Hand in copies of the answer report
and the sensitivity report.
c. If you were to give it a two-dimensional interpretation (that is, think of a two product model
on a graph), how would you interpret the "allowable increase" for the X3 coefficient?
d. Would it be worth for the firm to acquire one more unit of input A if it cost $10 to do so?
Explain with reference to the shadow price.
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