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Institute of Business Administration, Karachi

EMBA Program
Assignment – 3
Name: Muhammad
Supply Chain Management ID #: 15357
Fahad Ahsan
Mr. Faisal Jalal

Important Dates
Assignment: 14th March, 2019
Hard Copy Submission: Final Examination Day
Soft Copy (word file) by email ([email protected]): 12th April 2019
Marks: 5.0
(NOTE: Late submission ZERO Marks)
Instructions:
Mention all steps and equations with your answers
Attach Excel sheets with this answer book. (Soft and Hard Copies)
01 Winkler Furniture manufactures two different types of china cabinets: a French
Provincial model and a Danish Modern model. Each cabinet produced must go through
three departments: carpentry, painting, and finishing. The table below contains all
relevant information concerning production times per cabinet produced and production
capacities for each operation per day, along with net revenue per unit produced. The firm
has a contract with an Indiana distributor to produce a minimum of 300 of each cabinet
per week (or 60 cabinets per day). Owner Bob Winkler would like to determine a product
mix to maximize his daily revenue.
(a) Formulate as an LP problem.
(b) Solve using XLS solver

Solution:
Variables:
1. French Provincial cabinets (X)
2. Danish Modern cabinets (Y)
Constraints:
1. Carpentry capacity(A) <= 360
2. Painting capacity(B) <= 200
3. Finishing capacity(C) <= 125
Objective function:
To maximize the daily revenue
Z(max) = 28(X) + 25(Y)
Answer:
French provincial cabinets = 60, Danish Modern cabinets = 90
Max Revenue on this quantity is 3930.
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02 A candidate for mayor in a small town has allocated $40,000 for last-minute advertising
in the days preceding the election. Two types of ads will be used: radio and television.
Each radio ad costs $200 and reaches an estimated 3,000 people. Each television ad costs
$500 and reaches an estimated 7,000 people. In planning the advertising campaign, the
campaign manager would like to reach as many people as possible, but she has stipulated
that at least 10 ads of each type must be used. Also, the number of radio ads must be at
least as great as the number of television ads. How many ads of each type should be used?
How many people will this reach?

Solution:
Variables:
1. No. of Radio Ads (X)
2. No. of TV Ads (Y)
Constraints:
1. 200(X) + 500 (Y) <= 40,000
2. No. of Radio Ads (X) => 10
3. No. of TV Ads (Y) => 10
4. X => Y
Objective function:
Maximizing the reach via Ads
Z(max) = 3000(X) + 7000(Y)
Answer:
No. of Radio Ads = 175
No. of TV Ads = 10
Maximum reach to 595,000 people.
03 The Outdoor Furniture Corporation manufactures two products, benches and picnic
tables, for use in yards and parks. The firm has two main resources: its carpenters (labor
force) and a supply of redwood for use in the furniture. During the next production cycle,
1,200 hours of labor are available under a union agreement. The firm also has a stock of
3,500 feet of good-quality redwood. Each bench that Outdoor Furniture produces
requires 4 labor hours and 10 feet of redwood; each picnic table takes 6 labor hours and
35 feet of redwood. Completed benches will yield a profit of $9 each, and tables will result
in a profit of $20 each. How many benches and tables should Outdoor Furniture produce
to obtain the largest possible profit?

Solution:
Variables:
1. No. of Benches(X)
2. No. of Tables (Y)
Constraints:
1. Labor Hours (A) <= 1200
2. Quantity of Redwood (B) <= 3500
Objective function:
To maximize the profit
Z(max) = 9(X) + 20(Y)
Answer:
No. of Benches = 262, No. of Tables = 25
Maximum profit is 2858 USD
04 The dean of the Western College of Business must plan the school’s course offerings for
the fall semester. Student demands make it necessary to offer at least 30 undergraduate
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and 20 graduate courses in the term. Faculty contracts also dictate that at least 60
courses be offered in total. Each undergraduate course taught costs the college an
average of $2,500 in faculty wages, and each graduate course costs $3,000. How many
undergraduate and graduate courses should be taught in the fall so that total faculty
salaries are kept to a minimum?

Solution:
Variables:
1. No. of undergraduate courses (X)
2. No. of graduate courses (Y)
Constraints:
1. Undergraduate courses (X) => 30
2. Graduate courses (Y) => 20
3. Total courses (A) => 60
Objective function:
To minimize the salary
Z(min) = 2500(X) + 3000(Y)
Answer:
No. of undergraduate courses = 40
No. of graduate courses = 20
Minimizing Salary is 160,000/-

05 MSA Computer Corporation manufactures two models of minicomputers, the Alpha 4 and
the Beta 5. The firm employs five technicians, working 160 hours each per month, on its
assembly line. Management insists that full employment (i.e., all 160 hours of time) be
maintained for each worker during next month’s operations. It requires 20 labor hours to
assemble each Alpha 4 computer and 25 labor hours to assemble each Beta 5 model. MSA
wants to see at least 10 Alpha 4s and at least 15 Beta 5s produced during the production
period. Alpha 4s generate $1,200 profit per unit, and Beta 5s yield $1,800 each.
Determine the most profitable number of each model of minicomputer to produce during
the coming month.
Solution:
Variables:
1. No. of Alpha 4 produced (X)
2. No. of Beta 5 produced (Y)
Constraints:
1. Labor hours per month (A) = 160x5 = 800
2. No. of Alpha 4 produced (X) => 10
3. No. of Beta 5 produced (Y) => 15
Objective function:
To maximize the profit
Z(max) = 1200(X) + 1800(Y)
Answer:
No. of Alpha 4 produced = 10, No. of Beta 5 produced = 24
It maximizes the profit to 55200 USD

06 Woofer Pet Foods produces a low-calorie dog food for overweight dogs. This product is
made from beef products and grain. Each pound of beef costs $0.90, and each pound of
grain costs $0.60. A pound of the dog food must contain at least 9 units of Vitamin 1 and
10 units of Vitamin 2. A pound of beef contains 10 units of Vitamin 1 and 12 units of
Vitamin 2. A pound of grain contains 6 units of Vitamin 1 and 9 units of Vitamin 2.
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Formulate this as an LP problem to minimize the cost of the dog food. How many pounds
of beef and grain should be included in each pound of dog food? What is the cost and
vitamin content of the final product?

Solution:
Variables:
1. No. of pounds of beef in one pound of food (X)
2. No. of pounds of grain in one pound of food (Y)
Constraints:
1. X + Y = 1
2. 10X + 6Y => 9
3. 12X + 9Y => 10
Objective function:
To minimize the cost of dog food
Z(min) = 0.9(X) + 0.6(Y)
Answer:
No. of pounds of beef in one pound of food = 0.75
No. of pounds of grain in one pound of food = 0.25
Cost of final product will be 0.825 USD and Vitamin 1 content will be 9 and vitamin 2 content
will be 11.25

07 The seasonal yield of olives in a Piraeus, Greece, and vineyard is greatly influenced by a
process of branch pruning. If olive trees are pruned every two weeks, output is increased.
The pruning process, however, requires considerably more labor than permitting the
olives to grow on their own and results in a smaller size olive. It also, though, permits
olive trees to be spaced closer together. The yield of 1 barrel of olives by pruning
requires 5 hours of labor and 1 acre of land. The production of a barrel of olives by the
normal process requires only 2 labor hours but takes 2 acres of land. An olive grower has
250 hours of labor available and a total of 150 acres for growing. Because of the olive size
difference, a barrel of olives produced on pruned trees sells for $20, whereas a barrel of
regular olives has a market price of $30. The grower has determined that because of
uncertain demand, no more than 40 barrels of pruned olives should be produced. Use
graphical LP to find
(a) The maximum possible profit.
(b) The best combination of barrels of pruned and regular olives.
(c) The number of acres that the olive grower should devote to each growing
process.

Solution:
Variables:
1. Yield of olives by pruning (X)
2. Yield of olives by normal process (Y)
Constraints:
1. Land constraint X + 2Y <= 150
2. Labor hours constraint 5X + 2Y <= 250
3. X <=40

Objective function:
To maximize the possible profit
Z(max) = 20(X) + 30(Y)
Answer:
 Maximum possible profit = $2370
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Best combination of pruned and regular olives
 Yield of olives by pruning = 24
 Yield of olives by normal process = 63

Number of Acres devoted to each growing process

 No. of Acre for pruned olive = 24
 No. of Acre for regular olive = 126
08 Bhavika Investments, a group of financial advisors and retirement planners, has been
requested to provide advice on how to invest $200,000 for one of its clients. The client
has stipulated that the money must be put into either a stock fund or a money market
fund, and the annual return should be at least $14,000. Other conditions related to risk
have also been specified, and the following linear program was developed to help with
this investment decision:

(a) How much money should be invested in the money market fund and the stock
fund? What is the total risk?
(b) What is the total return? What rate of return is this?
(c) Would the solution change if risk measure for each dollar in the stock fund
were 14 instead of 12?
(d) For each additional dollar that is available, how much does the risk change?
(e) Would the solution change if the amount that must be invested in the money
market fund were changed from $40,000 to $50,000?

Solution:
Variables:
a) Stock Investment (S)
b) Money market Investment (M)
Constraints:
a) S+M = 200,000
b) 0.1S + 0.05M = > 14000
c) M = > 40000

Objective function:
To minimize the risk
Z(min) = 12(S) + 5(M)

Answer:
i. Stock investment = 80,000 Money Market investment = 120000
a. Total Risk = 1560000
ii. Total return = 14000
a. Rate of return = 7%
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iii. Objective function will change to 1720000
iv. There will be no change in risk

No change will occur if invested money limit is changed from $40,000 to $50,000

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