2. The Queen City Style Company makes several lines of skirts,dresses, and sport coats. Recently, a consultant suggested that thecompany reevaluate its South Islander line and allocate itsresources to products that would maximize contribution to profitsand to overhead. Each product requires the same polyester fabricand must pass through the cutting and sewing departments. Thefollowing data were collected for the study: Product ProcessingTime (hr) Material (yd) Max. Demand Cutting Sewing Skirt 1 1 1 -Dress 3 4 1 - Sport coat 4 6 4 150 The cutting department has 1000hours of capacity, sewing has 1600 hours of capacity, and 800 yardsof material are available. Each skirt contributes $8 to profits andoverhead; each dress, $10; and each sport coat $35.
d. How would you interpret the shadow price = 3 and theallowable increase = 25, which you obtain for the maximum demandconstraint in the sensitivity report? Interpret this with themarketing effort to increase demand.
e. How does the shadow price of a resource change if the limitedresource decreases by the allowable decrease limit? If the resourceincreases by the allowable increase limit?
