Business Optimization
Spring 2023
Revision tutorial
Question 1
A company produces interior and exterior paint from two basic products M1 and M2. The
following table provides all necessary information regarding the quantity needed to produce
one ton from each product, the available quantities per day, as well as the net profit per ton of
each product.
Quantity needed / ton available quantity
exterior interior /day
M1 6 4 24
M2 1 2 6
Profit/ton 5 4
Additional constraint:
• Maximum demand for interior paint: 2 tons/day.
• The production of interior paint does not exceed that of exterior paint by one ton.
Formulate the problem as a LP.
Question 2
A company wishes to carry out an advertising campaign in television, radio and newspapers for
a product recently launched on the market. The goal of the campaign is to attract as much
customers as possible. The results of a market study are given in the following table:
TV Radio Newspapers
Local By
satellite
Cost/unit 40 75 DT 30 15 DT
DT DT
Number of potential clients per ad 400 900 500 200
Number of potential clients (women) 300 400 200 100
per ad
1
The company plans to pay no more than 800DT for the whole campaign. In addition, the
following objectives must be achieved:
a. At least 2000 women look, hear or read advertising.
b. The advertising campaign in television must not exceed 500 DT.
c. At least 3 advertising spots will be provided by local television and at least two spots
by satellite television.
d. The number of advertisements in the radio or in the newspapers are for each between 5
and 10.
Formulate the problem as a LP.
Question 3
Consider the following LP.
𝑀𝑎𝑥𝑍 = 300𝑥1 + 500 𝑥2
𝑥1 + 𝟐𝑥2 ≤ 20
2𝑥 + 𝑥2 ≤ 22
s.t.{ 1
𝑥1 + 𝑥2 ≤ 𝟏2
𝑥1 , 𝑥2 ≥ 0
Solve the problem using the simplex method and specify all extreme points till optimality is
reached. Then, determine the type of each constraint.
Question 4
Consider the following LP.
𝑀𝑎𝑥𝑍 = 2𝑥1 + 5𝑥2
𝑥1 ≤ 5
2𝑥2 = 12
s.t.{
3𝑥1 + 2𝑥2 ≥ 18
𝑥1 , 𝑥2 ≥ 0
1. Solve the LP graphically.
2. Specify the nature of each constraint.
3. Provide the dual LP.
4. Deduce the optimal solution of the dual LP using Complementary slackness theorem.
2
Question 5
A company manufactures 3 products P1, P2, and P3 using three resources: technical service
hours, labor hours, and administrative service hours. To plan its production, the company uses
the following LP:
Max Z = 10X1 + 6X2 + 4X3 (Profit)
s.t. X1 + X2 + X3 100 (technical service hours)
10X1 + 4X2 + 5X3 600 (labor hours)
2X1 + 2X2 + 6X3 300 (administrative service hours)
X1 0, X2 0, X3 0
Where Xi indicates the produced quantity of Pi; i=1, 2, 3
The optimal simplex tableau is given below
10 6 4 0 0 0 R.H.S
X1 X2 X3 S1 S2 S3
6 X2 0 1 5/6 5/3 -1/6 0 200/3
10 X1 1 0 1/6 -2/3 1/6 0 100/3
0 S3 0 0 4 -2 0 1 100
Zj 10 6 40/6 10/3 2/3 0 2200/3
Cj-Zj 0 0 -8/3 -10/3 -2/3 0 -
1. Provide the optimal production plan of the company.
2. How much the company is willing to pay to obtain:
a. An additional labor hour?
b. An additional administrative service hour?
3. What is (are) the profitable product(s)?
4. What is (are) the minimum selling price(s) of the non-profitable product(s) to be
incorporated in the production plan?
