178116163.xlsx.

ms_office

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RMC
Fuel Additive Solvent Base Solution 25 20 <-- Optimal solution Total Profit =SUMPRODUCT(B8:C8,B$4:C$4) Objective Function 40 30 1600 <-- Optimal objective value LHS RHS Slack Mtrl 1 0.4 0.5 20 <= 20 0 Mtrl 2 0.2 4 <= 5 1 Mtrl 3 0.6 0.3 21 <= 21 0

Questions 1. According to the LP result, how much of each product should be produced? What is the maximum possible profit?

2. Will there be any materials left?

3. If 3 additional tons of material 3 becomes available, what will be the effect on the maximum profit? 4. What will happen to the maximum profit if we have 2 tons less material 3 than we thought?

LP Model: Maximize profit = 40F + 30 S subject to: 0.4F + 0.5S 20 0.2S 5 0.6F + 0.3S 21 F, S 0

5. How about if we have 2 more tons of material 2? Produce 25 tons of Fuel Additive and 20 tons of Solvent Base. This will yield the max profit of $1600. 6. What if the unit profit of fuel additive is actually $30 (rather than $40)? Will this change the optimal solution? 7. What if the unit profit of fuel additive is actually $22?

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Electronic Communications
Distribution Channels Solution Total Profit Advertising Budget Salesforce Availability Production Level Retail Stores Req. Marine Business 25 90 10 2 1 425 84 8 3 1 Retail Direct Mail 150 0 70 9 3 1 1 60 LHS 15 1 5000 1775 600 150 <= <= = >= 48450 RHS Slack 5000 0 1800 25 600 0 150 0

LP Model: Maximize profit = 90M + 84B + 70R + 60D subject to: 10M + 8B + 9R + 15D 5000 2 M + 3B + 3R 1800 M + B + R + D = 600 R 150 M, B, R, D 0

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Advertising
AI American Idol SF Sunday Night Football TO The Office SM Sixty Minutes LO Law & Order 5 3

Note: All monetary values are in $1000s, and all exposures to ads are in millions of exposures.

4 5 Ads Purchased 6

Total Cost

Cost/ad 7 ($thousands)
8

475

342

179

122

105

3300

LHS<= RHS SLack =RHS-HS LHS>=RHS Surplus=LHS-RHS

Reqd Exposures Surplus

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

Exposures/ad Men 18-49 Men 50+ Women 18-49 Women 50+ Total viewers Cost/Viewer

Actual Exposures

We want integer solutions, so try rounding. AI=5, SM=5==>infeasible soln try AI=6, SM=5==>feasible TC=3460 adding int constraint gives AI=5, SM=5, LO=3 and TC=3300

7 2 10 6.8 25.8 18.411

14 2 5 1.9 5 1 5 1 3 1.8 2 1.9 2 0.5 3 1 24 5.3 15 5.8 14.25 33.774 8.1333 18.103

65.700 38.000 65.700 52.000

221.400

>= >= >= >=

65 20 65 20

0.700 18.000 0.700 32.000

LP Model:
Minimize subject to 475 AI + 342 SF + 179 TO + 122 SM + 105 LO (cost objective)

7 AI + 14 SF + 2 TO + 5 SM + 1.9 LO

65

(Men 18-49) (Men 50+) (Women 18-49)

(Women 50+)

2 AI + 5 SF + 1 TO + 5 SM + 1 LO 20 10 AI + 3 SF + 1.8 TO + 2 SM + 1.9 LO 65
6.8 AI + 2 SF + 0.5 TO + 3 SM + 1 LO

20

AI, SF, TO, SM, LO 0

C integer

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Welte Mutual Funds

Invested Amt. Total Annual Return Total Funds Oil Limit Steel Limit Bonds Req. Pacific Oil Limit Atlantic Oil Pacific Oil MW Steel Huber Steel Govt Bonds 20000 30000 0 40000 10000 0.073 1 1 0.103 1 1 0.064 1 1 -0.25 -0.6 0.4 0.075 1 1 -0.25 0.045 8000 LHS 1 100000 50000 40000 1 0 -1.82E-12

Questions 1. What is the rate of return from this portfolio? What is the marginal rate of return from this portfolio (i.e., if you invest a $1 more, what is the additional return)?
RHS Slack 100000 0 50000 0 50000 10000 0 0 0 1.8E-12

= <= <= >= <=

2. Suppose Pacific Oils rate of return is decreased. By how much will it have to decrease for it to make a difference in the investment recommendation? 3. Suppose the total amount to invest is $200,000 instead of $100,000. In addition to changing the RHS value of the first constraint, what other RHS value(s) should be changed for the model to make sense? 4. Let the decision variables be the proportion invested instead of $ invested. Change the model appropriately and solve. Is the result consistent with the original result?

LP Model: Maximize 0.073A + 0.103P + 0.064M + 0.075H + 0.045G subject to (1) A + P + M + H + G = 100,000 (2) A + P 50,000 (3) M+ H 50,000 (4) -0.25M 0.25H + G 0 (5) -0.6A + 0.4P 0 A, P, M, H, G 0

1. ROR:8000/100000=8%; if 100,001 you would put solver and resolve the problem..return would go up .069 or 6.9 cents. (6.9%) 2.PO's ROR would have to decrease to less than .073(AO's ROR) to make a difference.

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National Insurance
Data Stock Annual rate of return Risk measure/$ invested Total amt to invest Min acceptable return Max proportion of stock A 0.12 0.1 $200,000 9% 50% B 0.08 0.07 C 0.06 0.05 D 0.1 0.08

LP Model: Minimize 0.1 A + 0.07 B + 0.05 C + 0.08 D subj. to: A+B+C+D = 200,000 0.12 A + 0.08 B + 0.06 C + 0.1 D 18,000 A 100,000 B 100,000 C 100,000 D 100,000 A, B, C, D 0

Model A Solution Risk Total Invested Return Limit on A Limit on B Limit on C Limit on D 33333.33 0.1 1 0.12 1 B 0.00 0.07 1 0.08 1 1 C 66666.67 0.05 1 0.06 D 100000.00 0.08 Total 14666.67 LHS 1 200000 0.1 18000 33333.33333 0 66666.66667 1 100000 Risk of Portfolio 7.3% RHS Slack 200000 0 18000 0 100000 66666.66667 100000 100000 100000 100000 0

= >= <= <= <= <=