Cristian Alvarez
03/24/19
Professor Jose Rocha
Quantitative Analysis for Decision Making
Chapter 8 Problem Questions (1-5)
8-1 (Production problem) Winkler Furniture manufactures two different types of china
cabinets: a French Provincial model and a Danish Modern model. Each cabinet produced must
go through three departments: carpentry, painting, and finishing. The table below contains all
relevant information concerning production times per cabinet produced and production capacities
for each operation per day, along with net revenue per unit produced. The firm has a contract
with an Indiana distributor to produce a minimum of 300 of each cabinet per week (or 60
cabinets per day). Owner Bob Winkler would like to determine a product mix to maximize his
daily revenue.
a. Formulate as an LP problem.
b. Solve using an LP software program or spreadsheet.
X1 = Number of French Provincial cabinets produced per day
X2 = Number of Danish Modern cabinets produced per day
Maximize revenue: 28X1 + 25X2
Carpentry hours available: 3X1 + 2X2 ≤ 360
Painting hours available: 1.5X1 + X2 ≤ 200
Finishing hours available: 0.75X1 + 0.75X2 ≤ 125
Contract requirement on French Provincial cabinets: X1 ≥ 60
Contract requirement on Danish Modern cabinets: X2 ≥ 60
Non-negativity constraints: X1, X2 ≥ 0
Optimal Solution: X1 = 60, X2 = 90
Revenue = $3,930
8-2(Investment decision problem) The Heinlein and Krampf Brokerage firm has just
been instructed by one of its clients to invest $250,000 of her money obtained recently through
the sale of land holdings in Ohio. The client has a good deal of trust in the investment house, but
she also has her own ideas about the distribution of the funds being invested. In particular, she
requests that the firm select whatever stocks and bonds they believe are well rated, but within the
following guidelines:
CABINET CARPENTRY PAINTING FINISHING NET REVENUE/
STYLE (HOURS/ (HOURS/ (HOURS/ CABINET ($)
CABINET) CABINET) CABINET)
French 3 1.5 0.75 28
Provincial
Danish Modern 2 1 0.75 25
Department 360 200 125
CABINET CARPENTRY PAINTING FINISHING NET REVENUE/
STYLE (HOURS/ (HOURS/ (HOURS/ CABINET ($)
CABINET) CABINET) CABINET)
capacity (hours)
Data for Problem 8-1
a. Municipal bonds should constitute at least 20% of the investment.
b. At least 40% of the funds should be placed in a combination of electronic
firms, aerospace firms, and drug manufacturers.
c. No more than 50% of the amount invested in municipal bonds should be
placed in a high-risk, high-yield nursing home stock.
INVESTMENT PROJECTED RATE OF RETURN (%)
Los Angeles municipal bonds 5.3
Thompson Electronics, Inc. 6.8
United Aerospace Corp. 4.9
Palmer Drugs 8.4
Happy Days Nursing Homes 11.8
Subject to these restraints, the client’s goal is to maximize projected return on investments. The
analysts at Heinlein and Krampf, aware of these guidelines, prepare a list of high-quality stocks
and bonds and their corresponding rates of return:
A. Formulate this portfolio selection problem using LP.
B. Solve this problem.
A) L = money invested in Los Angeles municipal bonds
T = money invested in Thompson Electronics
U = money invested in United Aerospace Corp.
P = money invested in Palmer Drugs
H = money invested in Happy Days Nursing Homes
Maximize return (Z) = 0.053L + 0.068T + 0.049U + 0.084P + 0.118H
a. Municipal bonds
L 0.2 (L + T + U + P + H)
0.8L – 0.2T – 0.2U – 0.2P – 0.2H 0
b. Combination of Electronics, Aerospace, and Drugs T + U + P 0.4 (L + T + U + P + H)
-0.4L + 0.6T + 0.6U + 0.6P – 0.4H 0
c. Nursing Homes as percentage of bonds
H = 0.5L
H - 0.5L = 0
Funds to be invested = L + T + U + P + H = 250,000
Non- negativity = L, T, U, P, H 0
LHS
L T U P H RHS
United
Los Angeles Thompson Aerospace Palmer Happy Days
Municipal Bonds Electronics, Inc. Corp. Drugs Nursing Homes
Money Invested 50,000 0 0 175000 25000
Return 5.30% 6.80% 4.90% 8.40% 11.80% 20300
250000 ≤
Total 1 1 1 1 1 250,000
0 ≤
Nursing -0.5 0 0 0 1 0
75000 ≤
Electronics -0.4 0.6 0.6 0.6 -0.4 0
Aerospace, Drug, 0 ≥
Municipal Bonds 0.8 -0.2 -0.2 -0.2 -0.2 0
B) Total Returns = 20,300
L= 50,000
T,U= 0
P= 175,000
H=25,000
8-3 (Restaurant work scheduling problem). The famous Y. S. Chang Restaurant is
open 24 hours a day. Waiters and busboys report for duty at 3 a.m., 7 a.m., 11 a.m., 3 p.m.,
7 p.m., or 11 p.m., and each works an 8-hour shift. The following table shows the minimum
number of workers needed during the six periods into which the day is divided. Chang’s
scheduling problem is to determine how many waiters and busboys should report for work at the
start of each time period to minimize the total staff required for one day’s operation.
(Hint: Let Xi equal the number of waiters and busboys beginning work in time period i, where i =
1, 2, 3, 4, 5, 6.)
PERIOD TIME NUMBER OF WAITERS AND BUSBOYS
REQUIRED
1 3 a.m.–7 a.m. 3
2 7 a.m.–11 a.m. 12
3 11 a.m.–3 p.m. 16
4 3 p.m.–7 p.m. 9
5 7 p.m.–11 p.m. 11
PERIOD TIME NUMBER OF WAITERS AND BUSBOYS
REQUIRED
6 11 p.m.–3 a.m 4
Xi = Number of workers who started work at time period i (i=1,2,3,4,5,6)
Minimize Min. staff size: X1 + X2 + X3 + X4 + X5 + X6
Subject to:
Period 1: X1 + X6 ≥ 3
Period 2: X1 + X2 ≥ 12
Period 3: X2 + X3 ≥ 16
Period 4: X3 + X4 ≥ 9
Period 5: X4 + X5 ≥ 11
Period 6: X5 + X6 ≥ 4
Non-negativity: X1, X2, X3, X4, X5, X6 ≥ 0
8-4 (Animal feed mix problem) The Battery Park Stable feeds and houses the horses
used to pull tourist-filled carriages through the streets of Charleston’s historic waterfront area.
The stable owner, an ex-racehorse trainer, recognizes the need to set a nutritional diet for the
horses in his care. At the same time, he would like to keep the overall daily cost of feed to a
minimum. The feed mixes available for the horses’ diet are an oat product, a highly enriched
grain, and a mineral product. Each of these mixes contains a certain amount of five ingredients
needed daily to keep the average horse healthy. The table on this page shows these minimum
requirements, units of each ingredient per pound of feed mix, and costs for the three mixes. In
addition, the stable owner is aware that an overfed horse is a sluggish worker. Consequently, he
determines that 6 pounds of feed per day are the most that any horse needs to function properly.
Formulate this problem and solve for the optimal daily mix of the three feeds.
A= number of pounds of oat product per horse per day
G= number of pounds of enriched grain per horse per day
M= number of pounds of mineral product per horse per day
Minimize cost (Z) = 0.09A +0.14G + 0.17M
Minimum daily requirement for ingredients:
Ingredient A: 2A + 3G + 1M ≥ 6.
Ingredient B: 0.5A+ 1G + 0.5M ≥ 2.
Ingredient C: 3A + 5G + 6M ≥ 9.
Ingredient D: 1A + 1.5G + 2M ≥ 8.
Ingredient E: 0.5A + 0.5G + 1.5M ≥ 5.
Maximum feed per day: A + G + M ≤ 6
Non-negativity: A, G, M ≥ 06
8-5 The Kleenglass Corporation makes a dishwasher that has excellent cleaning power.
This dishwasher uses less water than most competitors, and it is extremely quiet. Orders have
been received from several retail stores for delivery at the end of each of the next 3 months, as
shown below:
MONTH NUMBER OF UNITS
June 195
July 215
August 205
Due to limited capacity, only 200 of these can be made each month on regular time, and the cost
is $300 each. However, an extra 15 units per month can be produced if overtime is used, but the
cost goes up to $325 each. Also, if there are any dishwashers produced in a month that are not
sold in that month, there is a $20 cost to carry this item to the next month. Use linear
programming to determine how many units to produce in each month on regular time and on
overtime to minimize the total cost while meeting the demands.
A1 = Number of dishwashers produced in June (RT)
A2 = Number of dishwashers produced in July (RT)
A3 = Number of dishwashers produced in August (RT)
B1 = Number of dishwashers produced in June (OT)
B2 = Number of dishwashers produced in July (OT)
B3 = Number of dishwashers produced in August (OT)
C1 = Units of inventory left at the end of June (RT)
C2 = Units of inventory left at the end of July (RT)
C3 = Units of inventory left at the end of August (RT)
D1 = Units of inventory left at the end of June (RT)
D2 = Units of inventory left at the end of July (RT)
D3 = Units of inventory left at the end of August (RT)
Minimize Total Cost = 300A1 + 300A2 + 300A3 + 325A1 + 325A2 + 325A3 +20C1 +20C2 +
20C3 +20D1 +20D2 +20D3
A1 = 200
A2 = 200
A3 = 200
B1 215
B2 215
B3 215
A1 – C1 = 195
C1 + C2 – C2 = 215
C2 + C3 – C3 = 205
B1 – D1 = 195
D1 + D2 – D2 = 215
D2 + D3 – D3 = 205
RT: Regular Time
A1 = 200 UNITS A2 = 200 UNITS A3 = 200 UNITS
OT: Overtime
B1 = 229 UNITS B2 = 223 UNITS B3 = 215 UNITS
