Spreadsheet Modeling and Decision Analysis A Practical Introduction to Business Analytics 8th Edition Ragsdale Solutions

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Chapter 2 - Introduction to Optimization & Linear Programming : S-1
————————————————————————————————————————————

Chapter 2
Introduction to Optimization & Linear Programming
1. If an LP model has more than one optimal solution it has an infinite number of alternate optimal solutions.
In Figure 2.8, the two extreme points at (122, 78) and (174, 0) are alternate optimal solutions, but there are
an infinite number of alternate optimal solutions along the edge connecting these extreme points. This is
true of all LP models with alternate optimal solutions.

2. There is no guarantee that the optimal solution to an LP problem will occur at an integer-valued extreme
point of the feasible region. (An exception to this general rule is discussed in Chapter 5 on networks).

3. We can graph an inequality as if they were an equality because the condition imposed by the equality
corresponds to the boundary line (or most extreme case) of the inequality.

4. The objectives are equivalent. For any values of X1 and X2, the absolute value of the objectives are the
same. Thus, maximizing the value of the first objective is equivalent to minimizing the value of the second
objective.

5. a. linear
b. nonlinear
c. linear, can be re-written as: 4 X1 - .3333 X2 = 75
d. linear, can be re-written as: 2.1 X1 + 1.1 X2 - 3.9 X3 ≤ 0
e. nonlinear

6.

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 Chapter 2 - Introduction to Optimization & Linear Programming : S-2
————————————————————————————————————————————

7.

8.
X2

20

(0, 15) obj = 300

15
(0, 12) obj = 240

10
(6.67, 5.33) obj =140

5 (11.67, 3.33) obj = 125

(optimal solution)

0 5 10 15 20 25 X1
 Chapter 2 - Introduction to Optimization & Linear Programming : S-3
————————————————————————————————————————————

9.

10.
 Chapter 2 - Introduction to Optimization & Linear Programming : S-4
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11.

12.
 Chapter 2 - Introduction to Optimization & Linear Programming : S-5
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13. X1 = number of softballs to produce, X2 = number of baseballs to produce

MAX 6 X1 + 4.5 X2
ST 5X1 + 4 X2 ≤ 6000
6 X1 + 3 X2 ≤ 5400
4 X1 + 2 X2 ≤ 4000
2.5 X1 + 2 X2 ≤ 3500
1 X1 + 1 X2 ≤ 1500
X1, X2 ≥ 0

14. X1 = number of His chairs to produce, X2 = number of Hers chairs to produce

MAX 10 X1 + 12 X2
ST 4 X1 + 8 X2 ≤ 1200
8 X1 + 4 X2 ≤ 1056
2 X1 + 2 X2 ≤ 400
4 X1 + 4 X2 ≤ 900
1 X1 - 0.5 X2 ≥ 0
X1 , X2 ≥ 0
 Chapter 2 - Introduction to Optimization & Linear Programming : S-6
————————————————————————————————————————————

15. X1 = number of propane grills to produce, X2 = number of electric grills to produce

MAX 100 X1 + 80 X2
ST 2 X1 + 1 X2 ≤ 2400
4 X1 + 5 X2 ≤ 6000
2 X1 + 3 X2 ≤ 3300
1 X1 + 1 X2 ≤ 1500
X1, X2 ≥ 0
 Chapter 2 - Introduction to Optimization & Linear Programming : S-7
————————————————————————————————————————————

16. X1 = number of generators, X2 = number of alternators

MAX 250 X1 + 150 X2

ST 2 X1 + 3 X2 ≤ 260
1 X1 + 2 X2 ≤ 140
X1, X2 ≥ 0

17. X1 = number of generators, X2 = number of alternators

MAX 250 X1 + 150 X2

ST 2 X1 + 3 X2 ≤ 260
1 X1 + 2 X2 ≤ 140
X1≥ 20
X2 ≥ 20

d. No, the feasible region would not increase so the solution would not change -- you'd just have extra
(unused) wiring capacity.
 Chapter 2 - Introduction to Optimization & Linear Programming : S-8
————————————————————————————————————————————

18. X1 = proportion of beef in the mix, X2 = proportion of pork in the mix

MIN .85 X1 + .65 X2

ST 1X1 + 1 X2 = 1
0.2 X1 + 0.3 X2 ≤ 0.25
X1, X2 ≥ 0

19. T= number of TV ads to run, M = number of magazine ads to run

MIN 500 T + 750 P

ST 3T + 1P ≥ 14
-1T + 4P ≥ 4
0T + 2P ≥ 3
T, P ≥ 0
 Chapter 2 - Introduction to Optimization & Linear Programming : S-9
————————————————————————————————————————————

20. X1 = # of TV spots, X2 = # of magazine ads

MAX 15 X1 + 25 X2 (profit)
ST 5 X1 + 2 X2 < 100 (ad budget)
5 X1 + 0 X2 ≤ 70 (TV limit)
0 X1 + 2 X2 ≤ 50 (magazine limit)
X1, X2 ≥ 0
X2
40

(0,25)
30 (10,25)

15X1+25X2=775

20
(14,15)

10 15X1+25X2=400

(14,0)

10 20 X1
21. X1 = tons of ore purchased from mine 1, X2 = tons of ore purchased from mine 2

MIN 90 X1 + 120 X2 (cost)

ST 0.2 X1 + 0.3 X2 > 8 (copper)
0.2 X1 + 0.25 X2 > 6 (zinc)
0.15 X1 + 0.1 X2 > 5 (magnesium)
X1, X2 ≥ 0
 Chapter 2 - Introduction to Optimization & Linear Programming : S-10
————————————————————————————————————————————

22. R = number of Razors produced, Z = number of Zoomers produced

MAX 70 R + 40 Z
ST R + Z ≤ 700
R – Z ≤ 300
2 R + 1 Z ≤ 900
3 R + 4 Z ≤ 2400
R, Z ≥ 0

23. P = number of Presidential desks produced, S = number of Senator desks produced

MAX 103.75 P + 97.85 S

ST 30 P + 24 S ≤ 15,000
1 P + 1 S ≤ 600
5 P + 3 S ≤ 3000
P, S ≥ 0
 Chapter 2 - Introduction to Optimization & Linear Programming : S-11
————————————————————————————————————————————

24. X1 = acres planted in watermelons, X2 = acres planted in cantaloupes

MAX 256 X1 + 284.5 X2

ST 50 X1 + 75 X2 ≤ 6000
X1 + X2 ≤ 100
X1, X2 ≥ 0
X2

100 (0, 80) obj = 22760

75

(60, 40) obj =26740

50 (optimal solution)

25

(100, 0) obj = 25600

0
0 25 50 75 100 125 X1

25. D = number of doors produced, W = number of windows produced

MAX 500 D + 400 W

ST 1 D + 0.5 W ≤ 40
0.5 D + 0.75 W ≤ 40
0.5 D + 1 W ≤ 60
D, W ≥ 0
 Chapter 2 - Introduction to Optimization & Linear Programming : S-12
————————————————————————————————————————————

26. X1 = number of desktop computers, X2 = number of laptop computers

MAX 600 X1 + 900 X2

ST 2 X1 + 3 X2 ≤ 300
X1 ≤ 80
X2 ≤ 75
X1, X2 ≥ 0

Case 2-1: For The Lines They Are A-Changin’

1. 200 pumps, 1566 labor hours, 2712 feet of tubing.

2. Pumps are a binding constraint and should be increased to 207, if possible. This would increase profits
by $1,400 to $67,500.

3. Labor is a binding constraint and should be increased to 1800, if possible. This would increase profits
by $3,900 to $70,000.

4. Tubing is a non-binding constraint. They’ve already got more than they can use and don’t need any
more.

5. 9 to 8: profit increases by $3,050

8 to 7: profit increases by $850
7 to 6: profit increases by $0

6. 6 to 5: profit increases by $975

5 to 4: profit increases by $585
4 to 3: profit increases by $390

7. 12 to 13: profit changes by $0

13 to 14: profit decreases by $760
14 to 15: profit decreases by $1,440
 Chapter 2 - Introduction to Optimization & Linear Programming : S-13
————————————————————————————————————————————

8. 16 to 17: profit changes by $0

17 to 18: profit changes by $0
18 to 19: profit decreases by $400

9. The profit on Aqua-Spas can vary between $300 and $450 without changing the optimal solution.

10. The profit on Hydro-Luxes can vary between $233.33 and $350 without changing the optimal solution.
Spreadsheet Modeling
& Decision Analysis
A Practical Introduction to
Business Analytics
8th edition

Cliff T. Ragsdale

© 2017 Cengage Learning. All Rights Reserved. May not

be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
 Chapter 2

Introduction to Optimization
and Linear Programming

© 2017 Cengage Learning. All Rights Reserved. May not

be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
 Introduction
 We all face decision about how to use
limited resources such as:
– Oil in the earth
– Land for dumps
– Time
– Money
– Workers

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accessible website, in whole or in part.
 Mathematical Programming...
 MP is a field of management science that
finds the optimal, or most efficient, way of
using limited resources to achieve the
objectives of an individual of a business.
 a.k.a. Optimization

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accessible website, in whole or in part.
 Applications of Optimization
 Determining Product Mix
 Manufacturing
 Routing and Logistics
 Financial Planning

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accessible website, in whole or in part.
 Characteristics of
Optimization Problems
 Decisions
 Constraints
 Objectives

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accessible website, in whole or in part.
General Form of an Optimization Problem
MAX (or MIN): f0(X1, X2, …, Xn)
Subject to: f1(X1, X2, …, Xn)<=b1
:
fk(X1, X2, …, Xn)>=bk
:
fm(X1, X2, …, Xn)=bm

Note: If all the functions in an optimization are linear,

the problem is a Linear Programming (LP) problem
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 Linear Programming (LP) Problems

MAX (or MIN): c1X1 + c2X2 + … + cnXn

Subject to: a11X1 + a12X2 + … + a1nXn <= b1
:
ak1X1 + ak2X2 + … + aknXn >=bk
:
am1X1 + am2X2 + … + amnXn = bm

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accessible website, in whole or in part.
 An Example LP Problem

Blue Ridge Hot Tubs produces two types of hot

tubs: Aqua-Spas & Hydro-Luxes.
Aqua-Spa Hydro-Lux
Pumps 1 1
Labor 9 hours 6 hours
Tubing 12 feet 16 feet
Unit Profit $350 $300

There are 200 pumps, 1566 hours of labor,

and 2880 feet of tubing available.
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accessible website, in whole or in part.
 5 Steps In Formulating LP Models:

1. Understand the problem.

2. Identify the decision variables.
X1=number of Aqua-Spas to produce
X2=number of Hydro-Luxes to produce
3. State the objective function as a linear
combination of the decision variables.
MAX: 350X1 + 300X2

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 5 Steps In Formulating LP Models
(continued)

4. State the constraints as linear combinations

of the decision variables.
1X1 + 1X2 <= 200 } pumps
9X1 + 6X2 <= 1566 } labor
12X1 + 16X2 <= 2880 } tubing
5. Identify any upper or lower bounds on the
decision variables.
X1 >= 0
X2 >= 0
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 LP Model for
Blue Ridge Hot Tubs

MAX: 350X1 + 300X2

S.T.: 1X1 + 1X2 <= 200
9X1 + 6X2 <= 1566
12X1 + 16X2 <= 2880
X1 >= 0
X2 >= 0

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accessible website, in whole or in part.
 Solving LP Problems:
An Intuitive Approach
 Idea: Each Aqua-Spa (X1) generates the highest unit
profit ($350), so let’s make as many of them as possible!
 How many would that be?
– Let X2 = 0
1st constraint: 1X1 <= 200
2nd constraint: 9X1 <=1566 or X1 <=174
3rd constraint: 12X1 <= 2880 or X1 <= 240
 If X2=0, the maximum value of X1 is 174 and the total
profit is $350*174 + $300*0 = $60,900
 This solution is feasible, but is it optimal?
 No! © 2017 Cengage Learning. All Rights Reserved. May not
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accessible website, in whole or in part.
 Solving LP Problems:
A Graphical Approach

 The constraints of an LP problem

defines its feasible region.
 The best point in the feasible region is
the optimal solution to the problem.
 For LP problems with 2 variables, it is
easy to plot the feasible region and find
the optimal solution.
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X2
Plotting the First Constraint
250

(0, 200)
200
boundary line of pump constraint
X1 + X2 = 200
150

100

50
(200, 0)
0
0 50 100 150 200 250 X1
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 Plotting the Second Constraint
X2
(0, 261)
250
boundary line of labor constraint

200 9X1 + 6X2 = 1566

150

100

50

(174, 0)
0
0 50 100 150 200 250 X1
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be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
 Plotting the Third Constraint
X2
250
(0, 180)

200

150
boundary line of tubing constraint
12X1 + 16X2 = 2880
100

Feasible Region
50

(240, 0)
0
0 50 100 150 200 250 X1
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accessible website, in whole or in part.
X2 Plotting A Level Curve of the
Objective Function
250

200

(0, 116.67) objective function

150
350X1 + 300X2 = 35000

100

50 (100, 0)

0
0 50 100 150 200 250 X1
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accessible website, in whole or in part.
 A Second Level Curve of the
X2 Objective Function
250

(0, 175) objective function

200
350X1 + 300X2 = 35000

objective function
150 350X1 + 300X2 = 52500

100

(150, 0)
50

0
0 50 100 150 200 250 X1
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accessible website, in whole or in part.
 Using A Level Curve to Locate
X2 the Optimal Solution
250

objective function
200
350X1 + 300X2 = 35000

150
optimal solution

100
objective function
350X1 + 300X2 = 52500
50

0
0 50 100 150 200 250 X1
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accessible website, in whole or in part.
 Calculating the Optimal Solution
 The optimal solution occurs where the “pumps” and
“labor” constraints intersect.
 This occurs where:
X1 + X2 = 200 (1)
and 9X1 + 6X2 = 1566 (2)
 From (1) we have, X2 = 200 -X1 (3)
 Substituting (3) for X2 in (2) we have,
9X1 + 6 (200 -X1) = 1566
which reduces to X1 = 122
 So the optimal solution is,
X1=122, X2=200-X1=78
Total Profit = $350*122 + $300*78 = $66,100
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accessible website, in whole or in part.
 Enumerating The Corner Points
X2
250 Note: This technique will not work if
the solution is unbounded.
obj. value = $54,000
200 (0, 180)

obj. value = $64,000

150
(80, 120)

obj. value = $66,100

100
(122, 78)

50
obj. value = $0 obj. value = $60,900
(0, 0) (174, 0)
0
0 50 100 150 200 250 X1
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 Summary of Graphical Solution
to LP Problems

1. Plot the boundary line of each constraint

2. Identify the feasible region
3. Locate the optimal solution by either:
a. Plotting level curves
b. Enumerating the extreme points

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Understanding How Things Change
See file Fig2-8.xlsm

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 Special Conditions in LP Models
 A number of anomalies can occur in LP
problems:
– Alternate Optimal Solutions
– Redundant Constraints
– Unbounded Solutions
– Infeasibility

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 Example of Alternate Optimal Solutions
X2
250
objective function level curve
200 450X1 + 300X2 = 78300

150

100

alternate optimal solutions

50

0
0 50 100 150 200 250 X1
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 Example of a Redundant Constraint
X2
250
boundary line of tubing constraint

200
boundary line of pump constraint
150

boundary line of labor constraint

100

Feasible Region
50

0
0 50 100 150 200 250 X1
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accessible website, in whole or in part.
 Example of an Unbounded Solution
X2
1000 objective function
X1 + X2 = 600 -X1 + 2X2 = 400

800
objective function
X1 + X2 = 800

600

400

200

X1 + X2 = 400
0
0 200 400 600 800 1000 X1
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accessible website, in whole or in part.
 Example of Infeasibility
X2
250

200 X1 + X2 = 200

feasible region for

150 second constraint

100

feasible region
50 for first
constraint
X1 + X2 = 150
0
0 50 100 150 200 250 X1
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accessible website, in whole or in part.
End of Chapter 2

© 2017 Cengage Learning. All Rights Reserved. May not

be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Spreadsheet Modeling and Decision Analysis A Practical Introduction to Business Analytics 8th Edition Ragsdale Solutions Manual
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provided by Frontline Systems.

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