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Exercise For Chapter-2

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Israt Jahan
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34 views

Exercise For Chapter-2

assignment

Uploaded by

Israt Jahan
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Exercise for model development and solution by trial and error method

Problem-1:
Given: Max 10 x
s.t.
5x≤ 40
x ≥0
Suppose the firm in this example considers a second product that has a unit profit of $5 and requires 2
hours of production time for each unit produced. Use y as the number of units of product .
Req:
a. Show the mathematical model when both products are considered simultaneously.
b. Identify the controllable and uncontrollable inputs for this model.
c. Draw the flowchart of the input-output process for this model
d. What are the optimal solution values of x and y?

Problem-2:

A retail store in Des Moines, Iowa, receives shipments of a particular product from Kansas City and
Minneapolis. Let

x = number of units of the product received from Kansas City


y =number of units of the product received from Minneapolis

Req:
a. Write an expression for the total number of units of the product received by the retail store in Des
Moines.
b. Shipments from Kansas City cost $0.20 per unit, and shipments from Minneapolis cost $0.25 per
unit. Develop an objective function representing the total cost of shipments to Des Moines.
c. Assuming the monthly demand at the retail store is 5000 units, develop a constraint that requires
at least 5000 units to be shipped to Des Moines.
d. No more than 4000 units can be shipped from Kansas City, and no more than 3000 units can be
shipped from Minneapolis in a month. Develop constraints to model this situation.
e. Of course, negative amounts cannot be shipped. Combine the objective function and constraints
developed to state a mathematical model for satisfying the demand at the Des Moines retail store
at minimum cost.

Problem-3:

For most products, higher prices result in a decreased demand, whereas lower prices result in an
increased demand. Let
d = annual demand for a product in units
p = price per unit

Assume that a firm accepts the following price-demand relationship as being realistic:
d = 800 - 10p

where p must be between $20 and $70.

Req:
a. How many units can the firm sell at the $20 per-unit price? At the $70 per-unit price?
b. Show the mathematical model for the total revenue (TR), which is the annual demand multiplied by
the unit price.
c. Based on other considerations, the firm’s management will only consider price
alternatives of $30, $40, and $50. Use your model from part (b) to determine the
price alternative that will maximize the total revenue.
d. What are the expected annual demand and the total revenue corresponding to
your recommended price?

Problem-4:

The O’Neill Shoe Manufacturing Company will produce a special-style shoe if the
order size is large enough to provide a reasonable profit. For each special-style
order, the company incurs a fixed cost of $1000 for the production setup. The
variable cost is $30 per pair, and each pair sells for $40.
a. Let x indicate the number of pairs of shoes produced. Develop a mathematical
model for the total cost of producing x pairs of shoes.
b. Let P indicate the total profit. Develop a mathematical model for the total profit
realized from an order for x pairs of shoes.

Problem-5:

Financial Analysts, Inc., is an investment firm that manages stock portfolios for a number of clients. A
new client is requesting that the firm handle an $80,000 portfolio. As an initial investment strategy, the
client would like to restrict the portfolio to a mix of the following two stocks:

Stock Price/ Maximum Possible Investment


Share Estimated Annual
Return/Share
Oil Alaska Tk.50 Tk. 6 50000
Southwest Petroleum Tk. 30 Tk. 4 45000

Let,
x = number of shares of Oil Alaska
y =number of shares of Southwest Petroleum

Req:
a. Develop the objective function, assuming that the client desires to maximize the total annual return.
b. Show the mathematical expression for each of the following three constraints:
(1) Total investment funds available are $80,000.
(2) Maximum Oil Alaska investment is $50,000.
(3) Maximum Southwest Petroleum investment is $45,000.

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