Question

An accounting firm has 900 hours of on-the-clock staff time and 100 hours of reviewing time available to assign each week. The firm charges $300 for a tax return and $2000 for a small business audit. A small business audit requires 100 hours of staff time and 10 hours of review time. A tax return requires 12.5 hours of staff time and 2.5 hours of review time. In order to maximize their revenue for the week, how many small business audits and how many tax returns should the firm schedule? What is their maximum revenue for the week?
Constraints:

Objective Formula:

Answer 1

Answer:

The maximum revenue for the week is $19,000.

Step-by-step explanation:

Denote the variables as follows:

X = small business audit

Y = tax return

The maximizing function is:

Z = 2000·X + 300·Y

The maximizing function is subjected to the constraints:

100·X + 10·Y ≤ 900

10·X + 2·Y ≤ 100

0 ≤ X and 0 ≤ Y

The problem can be solved using the simples method as follows:

Let s and t be slack variables.

Initial:

         x           y         s       t       b                Basic

       100        10        1       0     900               s (departing)

       12.5      2.5        0       1      100                t

Z   -2000    -300     0       0       0

   (entering)

Step 1:

         x           y         s           t       b                Basic

         1          1/10     1/100     0      9               x

         0           1        -1/10      1       10              t (departing)

Z        0        -100       20      0       18000

               (entering)

Step 2:

         x       y         s           t         b                Basic

         1       0       1/50     -1/10      8               x

         0      1       -1/10         1        10              y

Z        0      0       10         100     19000

               (entering)

The optimal solution is:

X = 8

Y = 10

The maximum revenue for the week is $19,000.