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Linear Programming Exercises

The document describes two linear programming exercises. The first involves determining the optimal allocation of household interviews across time periods and demographic groups to minimize costs. The second involves determining the optimal investment allocation across shares and bonds to maximize annual return while respecting budget and risk constraints. Optimal solutions for both exercises are provided. The document concludes with multiple choice questions.

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180 views

Linear Programming Exercises

The document describes two linear programming exercises. The first involves determining the optimal allocation of household interviews across time periods and demographic groups to minimize costs. The second involves determining the optimal investment allocation across shares and bonds to maximize annual return while respecting budget and risk constraints. Optimal solutions for both exercises are provided. The document concludes with multiple choice questions.

Uploaded by

yellow fish
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Exercises and Activities (Linear Programming)

I. PR Developments

1) Define the decision variables

X1 = number of daytime interviews for households with children

X2 = number of evening interviews for households with children

X3 = number of daytime interviews for households without children

X4 = number of evening interviews for households with children

2) The objective function to be minimized is the total interview cost:

Minimize z= 50x1 + 60x2 + 40x3 + 50x4.

3) The constraints

a) At least 300 households with children should be interviewed:

x1 + x2 ≥ 300

b) At least 400 households without children should be interviewed

x3 + x4 ≥ 400

c) The total number of evening interviews should be greater than or equal to the number of
daytime interviews

x2 + x4 ≥ x1 + x3,

or re-written in standard format or linear programming model

-x1 + x2 – x3 + x4 ≥ 0.

d) At least 35% of the interviews for households with children should be conducted during
evening
x2 ≥ 0.35 (x1 + x2 ) , or -0.35x1 + 0.65x2 ≥ 0.

e) At least 65% of the interviews for households without children should be conducted during
evening:

x4 ≥ 0.65 (x3 + x4 ) , or -0.65x3 + 0.35x4 ≥ 0

f) Totally 1000 interviews should be conducted:

x1 + x2 + x3 + x4 = 1000

4. The nonnegativity constraints and the integer type of all variables

x1, x2, x3, x4 ≥ 0

x1, x2, x3, x4 are integers.

Exercise 2. Drink Invest, Inc

1. Define the decision variables

Each variable represents amount of money invested in shares/bonds:


X1 = amount invested in Tropical Beer share
X2 = amount invested in American Beer share
X3 = amount invested in American Brandy share
X4 = amount invested in Tropical Milk share
X5 = amount invested in Government Bond
2. The objective function corresponds to maximizing the total annual return of
portfolio
Since a value of x1 is money invested in Tropical beer shares, the annual return
ensuing from this investment is 0.12 x1. The annual returns for other investments
are counted similarly and the objective functions can be expressed as follows
Maximize z = 0.12x1 + 0.09x2 + 0.15x3 + 0.07x4 + 0.06x5.

3. The constraints
a) No more than 200 000 CZK might be invested in Tropical Milk shares
x4 ≤ 200 000
b) Government bonds should cover at least 20% of all investments
X5 ≥ 400 000 .
c) None of the alcohol-drink companies should receive more than 800 000
X1 ≤ 800 000 , x2 ≤ 800 000 , x3 ≤ 800 000 .

d) Risk index of the final portfolio should be maximally 0.05

0.07x1 + 0.09 x2 + 0.05x3 + 0.03x4 + 0.01x5


≤ 0.05
2 000 000

e) Budget restriction has to be respected


x1 + x2 + x3 + x4 + x5 = 2 000 000

4. The nonnegativity constraints

X1, x2, x3, x4, x5 ≥ 0

II. OPTIMAL SOLUTION Exercise 1

x1= 195
x2= 105

x3= 245

x4= 455

z= 48,600

OPTIMAL SOLUTION Exercise 2

x1 = 800 000,

x2 = 0,

x3 = 800 000,

x4 = 0,

x5 = 400 000.

z = 240 000.

III. MULTIPLE CHOICE


1. A
2. B
3. C
4. D
5. A
6. B
7. C
8. D
9. A
10. B
11. C
12. D
13. A
14. B
15. C

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