Lost Maples Winery Essay Example | Topics and Well Written Essays - 1000 words

Lost Maples Winery - Essay Example This report focuses on the arriving at the optimum production of the three wines produced by Lost Maples, namely Austin, St. Genevieve and Los Almos. The resources that are available for the coming week have been specified as 2,080 bushels of Variety A grapes, 2,040 bushels of Variety B grapes, 800 pounds of sugar and 1,060 man-hours of labour. It is very essential to ensure that these resources are carefully utilized by Lost Maples in order to attain maximum possible profits. It has been found that the optimum output comprises of 183 cases of Austin, 510 cases of St. Genevieve and no Los Almos wine to be produced. When this optimum amount of specific wine cases are produced by Lost Maples, the maximum contribution that will be attained is $ 18,680. It should also be noted that at this output, there is surplus (slack) of 2068 bushels of Variety A grapes and 617 pounds of sugar. It is evident from the results of the linear programming that there are 617 pounds of sugar left out after the optimum output is reached. The dual price or the shadow price indicates the effect of reducing the sugar available by 1 unit. In this case, reduction in sugar will not affect the maximum contribution, as there is surplus sugar available (Gal, 1986). Hence the sensitivity analysis indicates a shadow price of $0. The complimentary slackness condition indicates that the product of the slack/surplus and the dual price (shadow price) is equal to zero or in other words, either one of the slack or the dual price will be zero (Econ, 2008 and Alaouze, 1996). In this case this condition has been proved as the shadow price value is zero and hence the product is also zero.The allowable decrease in the labour has been computed as 549 man-hours. Hence the lower bound to labour in the ranging (sensitivity) analysis is (1060 – 549) 511 man-hours. When the man-hours falls reaches 510, the production of Austin has to be stopped and all the resources will be used only in the production of 5 10 cases St. Genevieve wine (Higle and Wallace, 2003). This indicates that when the available labour falls to 510 man-hours or below, only St. Genevieve wine has to be produced to attain maximum contribution.