The production manager for the Whoppy soft drink company is considering the production of two kinds of soft drinks: regular and diet. The company operates one 8-hour shift per day. Therefore, the production time is 480 minutes per day. During the production process, one of the main ingredients, syrup, is limited to maximum production capacity of 675 gallons per day. Production of a regular case requires 2 minutes and 5 gallons of syrup, while production of a diet case needs 4 minutes and 3 gallons of syrup. Profits for regular soft drink are $3.00 per case and profits for diet soft drink are $2.00 per case.
-The sensitivity range for the profit on a regular case of soda is
A) $2 to $3.
B) $2 to $4.
C) $1 to $3.
D) $1 to $3.33.

Question

Quizplus · Accepted Answer

The sensitivity range for the profit on a regular case of soda is $1 to $3.33. This is because the profit on a regular case of soda is $3.00, and the syrup cost is $0.67 per gallon. Therefore, the profit on a regular case of soda is $3.00 - (2 minutes * $0.67 per gallon * 5 gallons) = $3.00 - $6.70 = $2.30. The sensitivity range is the range of values for which the profit on a regular case of soda is positive. In this case, the sensitivity range is $1 to $3.33.

The Production Manager for the Whoppy Soft Drink Company Is