Management Science

Midterm Examination Part 1

CASE 1 - APPLIED TECHNOLOGY INCORPORATED

(Solve the case using linear programming graphical method)
Applied Technology Inc. (ATI) produces bicycle frames using two
fiberglass materials that improve the strength-to-weight ratio of the frames.
The cost of the standard grade material is USD7.50 per meter and the cost of
the professional grade material is USD9.00 per meter. The standard and
professional grade materials contain different amount of fiberglass, carbon
fiber, and Kevlar as shown in the following table.
Material Standard Grade Professional Grade
Fiberglass 84% 58%
Carbon Fiber 10% 30%
Kevlar 6% 12%
The company signed a contract with a bicycle manufacturer to produce
a new frame with a carbon fiber content of at least 20% and a Kevlar content
of not greater than 10%. To meet the required weight specification, a total of
30 meters of material must be used for each frame.
a. Formulate a linear program to determine the number of meters of
each grade of fiberglass material that ATI should use in each frame
in order to minimize total cost. Define the decision variables and
indicate the purpose of each constraint.
b. Use the graphical solution procedure to determine the feasible
region. What are the coordinates of the extreme points?
c. Compute the total cost at each extreme point. What is the optimal
solution?
d. The distributor of the fiberglass material is currently overstocked
with the professional grade material. To reduce inventory, the
distributor offered ATI the opportunity to purchase the professional
grade for USD8.00 per meter. Will the optimal solution change?
e. Suppose that the distributor further lowers the price of the
professional grade material to USD7.40 per meter, will the optimal
solution change? What effect would an even lower price for the
professional grade material have on the optimal solution? Explain.

CASE 2 - BLUEGRASS FARM CORPORATION

(Solve the case using linear programming simplex method)

The BlueGrass Farm, located in Alitagtag, Batangas, has been

experimenting with special diet for its horses. The feed components available
for the diet are a standard horse feed product, an enriched oat product, and a
new vitamin and mineral feed additive. The nutritional values in units per kilo
and the costs for the three feed components are summarized in the table.
Feed Component Standard Enriched Oat Additive
Ingredient A 0.8 0.2 0.0
Ingredient B 1.0 1.5 3.0
Ingredient C 0.1 0.6 2.0

Cost per kilo 25 50 300

The minimum daily diet requirements for each horse are 3 units of
ingredient A, 6 units of ingredient B, and 4 units of ingredient C. In
addition, to control the weight of horses, the total daily feed for a horse
should not exceed 6 kilos.
Determine the minimum cost mix that will satisfy the daily diet
requirements of horses.