Use the sensitivity report to answer these questions.

If Booster could get an additional 15kg of New Mexico, how much would the profit increase?

Question

Use the sensitivity report to answer these questions.

If Booster could get an additional 15kg of New Mexico, how much would the profit increase?

BlackTom AI · Accepted Answer

The task asks you to use the sensitivity report to determine how much profit would increase if Booster could obtain an additional 15 kg of New Mexico. However, the provided data is incomplete for performing the calculation.

First, identify what the sensitivity report provides in this context: typically, it lists the contribution margin or profit per unit (or per kilogram) for each product or material, and may also show the range of optimal production or purchase quantities, as well as shadow prices or dual values for constraints.

Next, locate the relevant metric for New Mexico in the sensitivity report. You are looking for the incremental profit per kilogram (or per unit) of New Mexico. This value is often labeled as the contribution margin per unit, profit per kilogram, or unit profit for New Mexico.

Once you have the per-kilogram profit figure, multiply it by the additional 15 kg to obtain the incremental profit:
- Incremental profit = (profit per kg of New Mexico) × 15 kg.

Important caveats:
- Check whether the sensitivity report indicates any limit on how much additional New Mexico can be acquired. If there is a constraint limit (e.g., only up to 10 kg can be added), then the maximum incremental profit would correspond to the feasible amount within that limit, not the full 15 kg.
- Verify that the per-kilogram profit is constant over the small range you’re analyzing. If the model assumes a linear relationship within the range, the simple multiplication is valid; if not, you may need a piecewise analysis.
- Confirm the unit of measure. If the report reports profit in a different unit (e.g., per bag, per case), ensure you convert to per kilogram correctly before multiplying by 15 kg.
- Be mindful of any changes in constraints that could alter the shadow price or feasibility when increasing New Mexico by 15 kg; if the constraint becomes binding or unbinding, the incremental profit could change.

If you cannot find a per-kilogram profit value in the sensitivity report due to missing data in the materials provided, you would need to request the specific figure from the report or the underlying model so you can compute the exact incremental profit: Incremental profit = (per-kg profit) × 15.

In summary, with the per-kilogram profit obtained from the sensitivity report, multiply by 15 to derive the expected profit increase, while ensuring there are no constraint limits or nonlinear effects that would alter this straightforward calculation.

COMM_V 190 101-104 2025W1 HW06.COMM190.2025W1 (Practice only; not for grading)

Use the sensitivity report to answer these questions. If Booster could get an additional 15kg of New Mexico, how much would the profit increase?

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