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Production of our Two Products The Operations VP asks you to recommend a production plan for this next week. There are two orange products this company markets: Bags of oranges and Cartons of orange juice. The primary inputs to production of these two products are oranges of two grades (obtained from suppliers) For production next week, we have available inventories of the two grades of oranges (listed below) that we will use. A production plan for a week specifies the lbs of oranges in bags and lbs of oranges in juice to produce. A good production plan is one that yields high profit contribution (revenue - variable cost) from the production output. Present supplies that are available next week to be used in production of bags and juice are the following: 120,000 lbs of grade 6 oranges 100,000 lbs of grade 10 oranges

Sunblessed Current Production Process: (1) We use 0.6 lb of grade 6 oranges and 0.4 lb of grade 10 for each lb of bags of oranges. (2) We use 0.5 lb of grade 6 oranges and 0.5 lb of grade 10 for each lb of orange juice. Other information obtained from Production and Marketing: (1) The mktg VP indicates that due to our current market, we want our production of bags (lbs) to be at least twice the production of juice (lbs). This means that lbs (bags)/lbs (juice) >= 2. Or, stating this market requirement as a linear inequality: 1 * lbs(bags) - 2 * lbs (juice) >= 0. (2) Our revenue per lb sold of bags of oranges is $2.00 and per lb sold of orange juice is $2.50. (3) The variable costs (labor, equipment use, oranges, variable overhead, etc) are estimated as follows: -- $0.80 per lb of orange bags -- $1.15 per lb of orange juice

Question: What is the variable cost generated by the optimal solution?

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