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# Problem 2

Kentwood Electronics manufactures three components for stereo systems: CD players, amplifiers, and stereo
tuners. The wholesale price and manufacturing cost of each item are shown in the following table.

Wholesale Manufacturing
Component Price Cost
CD Player \$150 \$75
Amplifier \$85 \$35
Stereo Tuner \$70 \$30

Each CD player produced requires 3 hours of assembly; each amplifier requires 2 hours of assembly; and each
tuner requires 1 hour of assembly. The marketing department has indicated that it can sell no more than
150,000 CD players, 100,000 amplifiers, and 90,000 stereo tuners. However, the demand is expected to be at
least 50,000 units of each item, and Kentwood wants to meet this demand. If Kentwood has 400,000 hours of
assembly time available, how many CD players, amplifiers, and stereo tuners should it produce in order to
maximize profits while meeting the minimum demand figures?
a) Word-process the linear programming model below.
Variables
C = Number of CD Players to be produced
A = Number of Amplifiers to be produced
S = Number of Stereo Tuners to be produced
Objective Function

Constraints

b) Set up the spreadsheet for Excel Solver. Copy and paste the spreadsheet below.
c) Copy and paste the Answer report below.

d) Write the Optimal Solution below. Note: The Optimal Solutions should include the optimal values for the
variables as well as the objective function.
Problem 3 (10 points)
A financial planner wants to design a portfolio of bonds for a client. The client has \$300,000 to invest and the
planner has identified four bond options for the money. The following requirements have been placed on the
planner. At least one third should be invested in long-term bonds which mature in seven or more years, and
no more than 25% of the total money should be invested in C or D since they are riskier bonds (i.e.,
investment in bond C and bond D added together should not exceed 25% of the total investment). All
\$300,000 should be invested. Develop and solve an LP model based on the data in this table and the
requirements of the client. The objective is to maximize the total return of the portfolio.
Bond Return Years to Maturity Rating
A 6.45% 9 1-Excellent
B 7.10% 8 2-Very Good
C 8.20% 5 4-Fair
D 9.00% 8 3-Good
a) Word-process the linear programming model below.
Variables
A = Dollars invested in Bond A
B = Dollars invested in Bond B
C = Dollars invested in Bond C
D = Dollars invested in Bond D
Objective Function

Constraints

b) Set up the spreadsheet for Excel Solver. Copy and paste the spreadsheet below.

## c) Copy and paste the Answer report below.

d) Write the Optimal Solution below. Note: The Optimal Solutions should include the optimal values for the
variables as well as the objective function.
Problem 4 (10 points)
Working with chemists at Virginia Tech and George Washington Universities, landscape contractor Kenneth
Golding blended his own fertilizer, called "Golding-Grow." It consists of four chemical compounds, C-30, C-92,
D-21, and E-11. The cost per pound for each compound is indicated as follows:

C-30 1.20

C-92 0.90

D-2l 1.10

E-11 0.40

## The specifications for Golding-Grow are as follows:

(1) E-1 1 must constitute at least 15% of the blend;
(2) C-92 and C-30 must together constitute at least 45% of the blend;
(3) D-21 and C-92 can together constitute no more than 30% of the blend; and
(4) Golding-Grow is packaged and sold in 50-pound bags.

Formulate and solve an LP problem to determine what blend of the four chemicals will allow Golding to
minimize the cost of a 50-pound bag of the fertilizer while meeting the requirements.

a) Word-process the linear programming model using the variables defined below:
Variables
X1 = Number of pounds of Chemical C-30 in each fertilizer bag
X2 = Number of pounds of Chemical C-92 in each fertilizer bag
X3 = Number of pounds of Chemical D-21 in each fertilizer bag
X4 = Number of pounds of Chemical E-11 in each fertilizer bag
Objective Function

Constraints
a) Set up the spreadsheet for Excel Solver. Copy and paste the spreadsheet below.

## b) Copy and paste the Answer report below.

c) Write the Optimal Solution below. Note: The Optimal Solutions should include the optimal values for
the variables as well as the objective function.