DEMAND MODEL

D = 2000 - 3P

Price
Demand

COST MODEL
C = 5000 + 4D = 5000 + 4 x ( 2000 - 3P) = 13000 - 12P

Total Cost
Total Revenue

TOTAL REVENUE
TR = D x P = ( 2000 - 3P) x P = 2000P - 3 P^2
TOTAL COST
TC = 13000 - 12P
TOTAL PROFIT
TP = TR - TC
= 2000P - 3 P^2 - (13000 - 12P)
= -13,000 + 2012 P - 3 P^2

Total Profit

335.33
994

8,976.00

333,321.33

324,345.33

P
$
$

Revenue

Price
Demand
Revenue

D
600.00
300.00

500
1200

=PxD
= P x (-2.333 P + 1900 )
= -2.333 P^2 + 1900 P
$
$

407.15
950
386,791.24

A
B

PRICE
$ 26.81
$ 33.10

Model Parameters
QTY SOLD REVENUE
20.00
(0.62)
0.30
13.31 $ 356.81
29.00
0.10
(0.60)
11.82 $ 391.25

TOTAL REV
$ 748.06

TOTAL REV

Pricing Decision Model

Inputs
Price $

500.00

Sales

1766.65

<=

$ 500.00

Model

Outputs
Total Revenue $ 883,325.00

Objective Cell (Max)

Cell
Name
Final Value
$C$10
Total Revenue
883325
Decision Variable Cells
Cell
$C$4

Name
Price

Constraints
None

Final
Reduced
Value
Gradient
$ 500.00 $ 292.40

Marquis Hotel Pricing Model

Data

Room type
Standard
Gold
Platinum
Suite

Current
Rate

$
$
$
$

Average
Daily Sold

85.00
98.00
139.00
180.00

Elasticity

250
100
50
20

-1.5
-2
-1
-2.5

Total Room
Capacity

450

Model

Room type
Standard
Gold
Platinum
Suite

New Price

$
$
$
$

84.58
87.25
152.75
139.75

Projected
Rooms
Sold

Price Range

$
$
$
$

70.00
90.00
120.00
150.00

$
$
$
$

90.00
110.00
149.00
200.00
Totals

252
122
45
31
450

Projected
Revenue

$ 21,301.12
$ 10,639.07
$ 6,881.98
$ 4,357.47
$ 43,179.63

Neighborhood
Liberty
Jefferson
Adams
Location of Restaurant

X-Coordinate

Y-Coordinate
2
9
1

1.00

Relative Size
12
6
1

1.00

1
2
8

X-Distance to
Restaurant
1.00
8.00
0.00

Y-Distance to
Restaurant
11.00
5.00
(0.00)

Straight Line
Distance to
Restaurant
11.05
9.43
0.00
29.91 TOTAL WEIGHTED DISTANCE

WEIGHTED DISTANCE

Neighborhood
A
B
C
D
E
Location of Warehouse

X-Coordinate

Y-Coordinate
18
3
20
3
10

12.00

Truckloads
15
4
5
16
20

11.99

12
18
24
12
18

X-Distance to
Warehouse
6.00
(9.00)
8.00
(9.00)
(2.00)

Y-Distance to
Warehouse
3.01
(7.99)
(6.99)
4.01
8.01

Straight Line
Distance to WH
6.71
12.04
10.62
9.86
8.26
818.99 TOTAL WEIGHTED DISTANCE

WEIGHTED DISTANCE

PARAMETERS
ANNUAL DEMAND

60000

Fixed Ordering Cost $

Purchase cost $
Holding rate
Holding cost $

50.00
3.95
15%
0.59

Number of Orders

18.85

Order quantity

3,182.23

DECISIONS

CALCULATIONS
Total Ordering
Total holding
Total purchase
Item ATC
Total ATC

$
$
$
$
$

942.74
942.74
237,000.00
238,885.47
238,885.47

PARAMETERS

Item 1
ANNUAL DEMAND

Item 2
2000

Fixed Ordering Cost $

Purchase cost $
Holding rate
Holding cost $

2000

150.00 $
100.00 $
0.20
20.00 $

135.00
50.00
0.20
10.00

DECISIONS
Number of Orders

22.48

16.76

Order quantity

88.97

119.36

CALCULATIONS
Total Ordering
Total holding
Total purchase
Item ATC
Total ATC

$
$
$
$
$

3,372.04
889.67
200,000.00
204,261.71
389,581.40

Inventory Value
20,000.02

$
$
$
$

2,262.11
596.79
100,000.00
102,858.89
OBJECTIVE

<=

SENSITIVITY REPORT
Item 3
1000
$
$
$

125.00
80.00
0.20
16.00

15.58

Objective Cell (Min)

Cell
Name
$C$20
Total ATC Item 1

Final Value
389581.4015

Decision Variable Cells

Cell
$C$11
$D$11
$E$11

Final
Value

Name
Number of Orders Item 1
Number of Orders Item 2
Number of Orders Item 3

22.48
16.76
15.58

64.19
Constraints
$
$
$
$

1,947.26
513.54
80,000.00
82,460.80

Budget
20,000.00

Cell
$C$23

Name
Inventory Value

Final
Value
20,000.02

Interpretations:
If Budget constraint was relaxed, for each dollar increase in the budget one could
reduce the total cost by 28 cents.

Reduced
Gradient
0.01
0.05

Lagrange
Multiplier
$

the budget one could

(0.28)

PARAMETERS

Item 1
ANNUAL DEMAND

Item 2
5000

Fixed Ordering Cost $

Purchase cost $
Holding rate
Holding cost $
Floor Space/Unit

1000

75.00 $
100.00 $
0.20
20.00 $
2.00

50.00
300.00
0.20
60.00
1.50

DECISIONS
Number of Orders

57.40

34.52

Order quantity

87.11

28.97

CALCULATIONS
Total Ordering
Total holding
Total purchase
Item ATC
Total ATC

$
$
$
$
$

4,304.81
871.12
500,000.00
505,175.93
5,773,455.19
Space Required
500.00

$
$
$
$

1,725.82
869.15
300,000.00
302,594.97
OBJECTIVE

<=

SENSITIVITY REPORT
Item 3

Item 4
7500

$
$
$

6000

50.00 $
500.00 $
0.20
100.00 $
3.00

75.00
200.00
0.20
40.00
1.00

Objective Cell (Min)

Cell
$C$21

Decision Variable Cells

Cell
$C$12
$D$12
$E$12
$F$12

127.94

56.36

58.62

106.46

Constraints

4,227.07
2,129.13
1,200,000.00
1,206,356.21

$C$24

Cell
$
$
$
$

6,397.04
2,931.04
3,750,000.00
3,759,328.08

Space Available
500.00

$
$
$
$

Interpretations:
If Space constraint was relaxed, for each sq ft increase in the s
reduce the total cost by $19.71.

Name
Total ATC Item 1

Name
Number of Orders Item 1
Number of Orders Item 2
Number of Orders Item 3
Number of Orders Item 4

Name
Space Required

Final Value
5773455.192

Final
Value
57.40
34.52
127.94
56.36

Final
Value

Reduced
Gradient
0.00
0.00
(0.00)

Lagrange
Multiplier
500.00
(19.71)

was relaxed, for each sq ft increase in the space one could

st by $19.71.

Home Market Value

House Age Square FeetMarket Value
Predicted
33
1812
90000 96159.13
32
1914 104400 99732.84
32
1842
93300 97210.22
33
1812
91000 96159.13
32
1836 101900
97000
33
2028 108500 103727
32
1732
87600 93356.22
33
1850
96000 97490.51
32
1791
89200 95423.36
33
1666
88400 91043.82
32
1852 100800 97560.58
32
1620
96700 89432.14
32
1692
87500 91954.76
32
2372 114000 115779.5
32
2372 113200 115779.5
33
1666
87500 91043.82
32
2123 116100 107055.4
32
1620
94700 89432.14
32
1731
86400 93321.18
32
1666
87100 91043.82
28
1520
83400 85928.51
27
1484
79800 84667.2
28
1588
81500 88310.98
28
1598
87100 88661.34
28
1484
82600 84667.2
28
1484
78800 84667.2
28
1520
87600 85928.51
27
1701
94200 92270.09
28
1484
82000 84667.2
28
1468
88100 84106.61
28
1520
88100 85928.51
27
1520
88600 85928.51
27
1484
76600 84667.2
28
1520
84400 85928.51
27
1668
90900 91113.89
28
1588
81000 88310.98
28
1784
91300 95178.11
27
1484
81300 84667.2
27
1520 100700 85928.51
28
1520
87200 85928.51
27
1684
96700 91674.47
27
1581 120700 88065.72

Errors
SSE
-6159.13 2,124,436,092.98
4667.163
-3910.22
-5159.13
4900
4773.017
-5756.22
-1490.51
-6223.36
-2643.82
3239.418
7267.857
-4454.76
-1779.5
-2579.5
-3543.82
9044.561
5267.857
-6921.18
-3943.82
-2528.51
-4867.2
-6810.98
-1561.34
-2067.2
-5867.2
1671.494
1929.91
-2667.2
3993.385
2171.494
2671.494
-8067.2
-1528.51
-213.889
-7310.98
-3878.11
-3367.2
14771.49
1271.494
5025.529
32634.28

SLOPE
INTERCEPT

35.0364
32,673.22

Example 9.3
35.0360
32,673.00

Glasgow Machine Tool

Unit

Hours
1
2
3
4
5
6
7
8
9
10

Predicted
3,161.00
2,720.00
2,615.00
2,278.00
2,028.00
2,193.00
2,249.00
2,268.00
1,994.00
2,000.00

Errors
3,125.74
2,730.36
2,522.69
2,384.99
2,283.39
2,203.59
2,138.30
2,083.31
2,035.98
1,994.56

SSE
35.26
(10.36)
92.31
(106.99)
(255.39)
(10.59)
110.70
184.69
(41.98)
5.44

134,810.11

a
b

3,125.74
0.20

DTP Corporation

Product 2
Advertising
Profit
(thousands) (millions)
$50
$21.49
$75
$21.51
$100
$21.99
$125
$21.80
$150
$22.21
$175
$22.23
$200
$22.32
$225
$22.12
$250
$22.20
$275
$22.47
$300
$22.08
$325
$22.22
$350
$22.31
$375
$22.20
$400
$22.53

Profit

Product 1
57.5
57
56.5
56
55.5
55
54.5
54
53.5
0

100

y = -0.000018x2 + 0.014021x + 53.736383

R = 0.742376

200

300

400

500

Advertising

Product 2

y = -0.000010x2 + 0.006789x + 21.234515

R = 0.729721

22.6
22.4
Profit

Product 1
Advertising $
Profit
(thousands) (millions)
$50
$53.89
$75
$54.91
$100
$54.87
$125
$55.48
$150
$55.97
$175
$56.02
$200
$55.33
$225
$56.42
$250
$55.53
$275
$55.77
$300
$56.56
$325
$56.72
$350
$56.20
$375
$56.15
$400
$57.01

22.2
22
21.8
21.6
21.4
0

100

200

300

Advertising

400

500

Product 1
Product 2
Advertising $
307.71 $
192.29
>=
>=
$
50.00 $
50.00

Profit $

56.35

22.17

500.00 <=

78.52

$ 500.00

Hal Chase Agency

Stock
Bond
SCIP
Average return
14.80%
6.00%
15.20%
Variance 0.014697
Covariance with stock
Covariance with bond

0.000155
0.000468

0.160791
(0.002222)
(0.000227)
TOTAL

Amount Invested 0.6169803 0.32100086 0.06201882

Total Return
Total Variance

12.00%
0.0063

>=

12%

1=

Plant Location Model

DATA
Plant
Marietta
Minneapolis
Fayetteville
Chico
Demand

Cleveland
$
12.60
$
9.75
$
10.41
$
13.88
300

Baltimore
$
14.35
$
16.26
$
11.54
$
16.95
500

Chicago
$
$
$
$

11.52
8.11
9.87
12.51
700

Phoenix
Realized Cap
$
17.58
1200
$
17.92
800
$
11.64
0
$
8.32
1500
1800

MODEL
Amount Shipped Cleveland
Baltimore
Chicago
Marietta
200
500
Minneapolis
100
0
Fayetteville
0
0
Chico
0
0
Demand Met
300
500

TOTAL COST $ 34,101.00

Phoenix
0
700
0
0
700

300
0
0
1500
1800

Total Shipped
1000
800
0
1500

Capacity
1200
800
1500
1500

Chosen
0
1
1 TOTAL

Fund
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Risk
High
High
High
High
High
High
Medium
Medium
Medium
Medium
Medium
Low
Low
Low
Low
Low
Low

Type
Stock
Stock
Stock
Stock
Stock
Blend
Blend
Blend
Blend
Blend
Blend
Blend
Blend
Bond
Bond
Bond
Bond

Return CHOSEN
11.98%
0
13.18%
0
9.40%
0
7.71%
0
8.35%
0
16.38%
1
4.10%
0
12.52%
1
8.62%
0
11.14%
0
8.78%
0
9.44%
0
8.38%
0
7.65%
1
6.90%
0
5.53%
0
6.30%
1
6

0%
0%
0%
0%
0%
5%
0%
5%
0%
0%
0%
0%
0%
5%
0%
0%
5%

<=
<=
<=
<=
<=
<=
<=
<=
<=
<=
<=
<=
<=
<=
<=
<=
<=

Percentage
0%
<=
0%
<=
0%
<=
0%
<=
0%
<=
40%
<=
0%
<=
35%
<=
0%
<=
0%
<=
0%
<=
0%
<=
0%
<=
20%
<=
0%
<=
0%
<=
5%
<=
100% TOTAL

0%
0%
0%
0%
0%
40%
0%
40%
0%
0%
0%
0%
0%
40%
0%
0%
40%

High Risk Limit

Bond Limit

40%
25%

TOTAL RETURN

12.78%

<=
>=

40%
25%

PARAMETERS
ANNUAL DEMAND

15000

Fixed Ordering Cost $

Purchase cost $
Holding rate
Holding cost $

200.00
22.00 for the first 1000 $19 for any additional
20%
4.40

DECISIONS
Number of Orders

4.22

Order quantity

3,554.09

CALCULATIONS
Total Ordering
Total holding
Total purchase
Item ATC
Total ATC

$
$
$
$
$

844.10
11,905.55
297,661.46
310,411.11
310,411.11

Stout Investments
Bond

S&P 500

Small cap

Mid cap

Bond
S&P 500
Small cap
Mid cap
Large cap
Emerging market
Commodity

0.002%
-0.001%
-0.001%
-0.001%
-0.001%
0.000%
0.000%

0.020%
0.027%
0.024%
0.019%
0.032%
0.000%

0.047%
0.039%
0.027%
0.050%
0.005%

0.033%
0.023%
0.043%
0.005%

Average weekly return

0.044%

0.118%

0.256%

0.226%

In this problm, the student is expected to generate a range of scenarios and solve the model for different targets and visualiz

Large cap

Emerging market

Commodity

0.027%
0.041%
0.009%

0.085%
0.015%

0.054%

0.242%

0.477%

0.053%

ferent targets and visualize the solution using the ideas discussed in previous chapters.

Thomson State College

Project
Time
Deadline

1
4
12

2
9
24

3
12
60

4
16
28

5
9
24

6
15
36

7
8
48

SEQUENCE
JOB
Processing Time
Completion Time
Due Date
Lateness
Tardiness

1
1
4
4
12
-8
0

2
7
8
12
48
-36
0

3
2
9
21
24
-3
0

4
5
9
30
24
6
6

5
3
12
42
60
-18
0

6
6
15
57
36
21
21

7
4
16
73
28
45
45

Average Lateness
Average Tardiness

1.00
10.29
EDD

SEQ

Processin
Completio
Du

Ta

Average La
Average Ta

SPT
SEQUENCE
JOB
Processing Time
Completion Time
Due Date
Lateness
Tardiness
Average Lateness
Average Tardiness

1
1
4
4
12
-8
0

2
7
8
12
48
-36
0

3
2
9
21
24
-3
0

4
5
9
30
24
6
6

5
3
12
42
60
-18
0

6
6
15
57
36
21
21

7
4
16
73
28
45
45

2
2
9
13
24
-11
0

3
5
9
22
24
-2
0

4
4
16
38
28
10
10

5
6
15
53
36
17
17

6
7
8
61
48
13
13

7
3
12
73
60
13
13

1.00
10.29

EDD
SEQUENCE
JOB
Processing Time
Completion Time
Due Date
Lateness
Tardiness
Average Lateness
Average Tardiness

1
1
4
4
12
-8
0
4.57
7.57

Thomson State College

Project
Time
Deadline

1
4
12

2
9
24

3
12
60

4
16
28

5
9
24

6
15
36

7
8
48

SEQUENCE
JOB
Processing Time
Completion Time
Due Date
Lateness
Tardiness

1
1
4
4
12
-8
0

2
5
9
13
24
-11
0

3
2
9
22
24
-2
0

4
6
15
37
36
1
1

5
7
8
45
48
-3
0

6
3
12
57
60
-3
0

7
4
16
73
28
45
45

Average Lateness
Average Tardiness

2.71
6.57

Tracy Ross Travel Distances

To
From
1
2
3
4
5
6
7
8

1
999
19
57
51
49
4
12
92

1
2
3
4
5
6
7
8

7
8
5
3
6
4
2
1

ORDER

2
19
999
51
10
53
25
80
53

3
57
51
999
49
18
30
6
47

Distance FROM
9
7
9
8
18
5
30
3
11
6
10
4
19
2
12
1
118 TOTAL

4
51
10
49
999
50
11
91
38

TO
8
5
3
6
4
2
1
7

5
49
53
18
50
999
68
62
9

6
4
25
30
11
68
999
48
94

7
12
80
6
91
62
48
999
9

8
92
53
47
38
9
94
9
999