24F- ADMN 2607- Intro to Management Sciences

Assignment: Linear Programming

Total Marks: 10 Due Date: Nov 27, 2024

THIS IS AN INDIVIDUAL ASSIGNMENT. DO NOT COPY OR SHARE YOUR SOLUTIONS.

• Any violation of the Academic Integrity Policies will result in an automatic zero, along with penalties
as specified in the policy.
• Submissions must be handwritten on 8.5 x 11 Letter Paper. Include all supporting steps, calculations
(up to at least 3 decimal points), and tables as demonstrated in class; failure to provide all necessary
steps will lead to point deductions.
• Use a ruler and appropriate measurement scale when creating graphs and plots. Graphs or plots not
made with the proper scale and tools will incur point penalties.
• The text or solution must be legible.
• LATE SUBMISSIONS WILL NOT BE ACCEPTED.

Question 1: Linear Programming (1 Point)

A manufacturing company produces three products: multimedia projectors and monitors. Each
multimedia projector requires 4 hours of labor and 3 units of material, while each monitor requires 2
hours of labor and 2 units of material. The total available labor is 40 hours, and the material is limited to
30 units in one day. The cost per multimedia projector is $200, and the cost per monitor is $50. In
addition, the following conditions apply:

• The production of multimedia projectors must not exceed 10 units.

• At least 6 monitors must be produced to meet demand.

Formulate the problem and find the production quantities of multimedia projectors and monitors that
minimize the total cost using the graphical method.

Question 2: LP- Simplex (1 Point)

A factory produces three products: widgets, gadgets, and trinkets. Each widget contributes $3 to profit,
each gadget contributes $4, and each trinket contributes $5. The production constraints are:

• Each widget requires 2 hours of assembly, each gadget requires 3 hours, and each trinket requires
1 hour. The assembly department has a maximum of 30 hours available.
• The packaging department can handle 3 widgets, 2 gadgets, and 2 trinkets daily, with a maximum
capacity of 18 items.
• The storage space limits production to a total of 10 gadgets and trinkets combined.

Determine the optimal production quantities of widgets, gadgets, and trinkets to maximize profit using
the simplex method.

Algoma University- School of Business & Economics

24F- ADMN 2607- Intro to Management Sciences
Assignment: Linear Programming

Question 3: LP- Sensitivity Analysis (2 Point)

a) Create a sensitivity table of Question 1.

b) A textile company produces scarves and shawls. The profit per scarf is $10, and the profit per shawl
is $15. Each scarf requires 1 hour of weaving and 2 hours of finishing, while each shawl requires 2
hours of weaving and 1 hour of finishing. The weaving department has a capacity of 100 hours, and
the finishing department has a capacity of 80 hours.

Formulate the LP problem. After solving it (using any method), analyze how changes in the weaving or
finishing hours would affect the optimal solution.

Question 4: LP Plane Cutting Method (1 Point)

A company produces deluxe and standard lamps. Each deluxe lamp requires 3 hours of labor and 2 units
of material, while each standard lamp requires 1 hour of labor and 1 unit of material. The labor available
is 18 hours, and the material available is 10 units. Also, at least 1 deluxe lamp must be produced to meet
customer orders and the total number of lamps produced must not exceed 7 as per the budget constraints.

The profit is $15 per deluxe lamp and $10 per standard lamp. Use the plane cutting method to find the
optimal production plan to maximize profit.

Question 5: LP- Branch and Bound Method (1 Point)

A manufacturing company produces two types of products: product A and product B. Each product A
requires 2 hours of labor and product B requires 4 hours of labor. The company has a total of 25 hours of
labor. Also, the production machine takes up to 8 hours to produce one product A depending on the
design of product and produces 2 piece of product B within 10 hours depending on the design. The profit
per unit of product A is $3, and the profit per unit of product B is $5.

Use the branch and bound method to determine the optimal production plan that maximizes the total
profit.

Question 6: Decision Analysis (4 Points)

a) A company is considering launching a new product. If the company launch a new product there is a
60% probability of high demand, resulting in a profit of $100,000. In case the new product doesn’t
produce a high demand, the overall profits would be low to $20,000. The cost of launching new
product is $40,000.
Alternatively, if the company decides not to launch a new product, it will continue to make the profit
from existing products of $30,000. Using the expected value approach with given probabilities and
profits scenarios, determine the best decision for the company to launch a new product or not.

Algoma University- School of Business & Economics

24F- ADMN 2607- Intro to Management Sciences
Assignment: Linear Programming

b) Now, if the company conducts market research to assess the economic environment to decide
whether to launch a new product. The market research would cost $20,000. The research company
highlighted that if there’s a good economic environment, the demand probabilities will be as below:

Demand Levels Good Economic Env (GEE) Bad Economic Env (BEE)
High P(GEE | High Demand) = 0.75 P(BEE | High Demand)= 0.25
Low P(GEE | Low Demand) = 0.20 P(BEE | Low Demand)= 0.80

Use the priori and posterior probability approach to support the decision to go for the launch of new
product or not. The decision criteria is if the expected monetary value is equal or above the cost of
launching new product.

c) Use the utility function (linear) to decide the decision of the company.

Algoma University- School of Business & Economics