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a. Let x, y and z be the number of units produced for product 1,2,3
respectively
Formulation is as follows:

Maximize Z=25x+28y+30z

subject to

1.5x+3y+2z <=450 (Department A)

2x+y+2.5z <= 350 (Department B)

0.25x+0.25y+0.25z<=50 (Department C)

x,y,z>=0 (Non negativity constraint)

b. The computer output is as follows

c. The setup cost for product 1,2,3 are respectively 400, 550, 600 respectively. This
means total setup cost is 1550 which should be reduced from the profit we had got
above. So now profit after considering the setup cost is 5540-1550= 3990
d. Actual optimal mix will be different if we take setup cost into our
formulation. Also limit has been placed on each of the products. 175, 150 and
140 on products 1,2,3 respectively. The updated formulation is as follows
Maximize Z=25ax+28by+30cz-400a-550b-600c

subject to

1.5ax+3by+2cz <=450 (Department A)

2ax+by+2.5cz <= 350 (Department B)

0.25ax+0.25by+0.25cz<=50 (Department C)

a,b,c =0,1 (either the production needs to be set up or not)

x<=175

y<=150

z<=140

x,y,z =non negative integers (Non negativity constraint)

e. The computer output for formulation in part (d) is as below:-

The projected value from revised formulation is 4350. 100, 100, 0 units of
product1, 2, 3 should be produced respectively for optimal soultion
The profit in this case is better than the case mentioned in part (c)