Quantitative Methods for Business_ Ms.

Dang Thi Uyen Thao 1

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from 1 to 5, in which 1 describes minimum and 5 describes maximum commitment.
_____________________________________________________________________________

QUANTITATIVE METHODS FOR BUSINESS

Ms. Dang Thi Uyen Thao
ASSIGNMENT CHAPTER 7 _ LINEAR PROGRAMING
dd/mm/yy

Full name & ID Contribution

★☆☆☆☆
1. Flair Furniture Company
Flair Furniture produces tables and chairs. Processes are similar in that both require a
certain number of hours in carpentry work and in the painting and varnishing department. Each
table takes 4 hours of carpentry and 2 hours of painting and varnishing, while each chair requires
3 of carpentry and 1 hour of painting and varnishing. There are 240 hours of carpentry
time available and 100 hours of painting and varnishing. Each table yields a profit of $70 and
each chair a profit of $50
The company wants to determine the best combination of tables and chairs to produce to reach the
maximum profit.
2. Holiday Meal Turkey Ranch
The Holiday Meal Turkey Ranch is considering buying two different brands of turkey feed and
blending them to provide a good, low-cost diet for its turkeys. Each feed contains some or all of the
three nutritional ingredients essential for fattening turkeys. Each pound of brand 1 (2) purchased,
contains 5 (10) ounces of ingredient A, 4 (3) ounces of ingredient B, and 0.5 (zero) ounce of
ingredient C. The minimum standards for the A, B, C nutritional ingredients are 90,
48,1.5 ounces accordingly. The brand 1 feed costs the ranch 2 cents a pound, while the brand 2
feed costs 3 cents a pound.
Quantitative Methods for Business_ Ms. Dang Thi Uyen Thao 2

The owner of the ranch would like to use LP to determine the lowest-cost diet that meets the
minimum monthly intake requirement for each nutritional ingredient.
3. Bora’s scheduling for a creepy semester
Bora is studying only 2 courses this semester, Quant and IFM. By “Work hard Play harder”, she
was scheduling:

• Not more than 12 studying hours per week.

• Every hour studying Quant or IFM Bora needs two or one hours of chilling out,
respectively
• Bora’s mom will not allow her dating out more than 16 hours per week.
• Complete about 40 or 30 MCQs per hour studying Quant or IFM, respectively.
Is there the most effective Bora’s schedule to perform on the highest level?
4. IU budget planning
The Head of the Accounting Department of International University HCMC must plan the
department’s course offerings for the fall semester. Student demands make it necessary to offer at
least 30 undergraduate 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 department an
average of $2,400 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?
5. Egypt’s gadget company
Egypt Co. offers to the market two types of gadgets. Regarding the nature of the
production process, and there are not more than 60 hours of the whole operation process. A gadget
of the regular type requires 1 hour of completing, while a premium gadget needs 3 hours of
finishing. To keep the production alive, Egypt Co. must make at least 10 gadgets a day. The
contribution of $3 is realized for each regular gadget and $9 for a premium gadget. The historical
record suggests that the demand of premium gadget is increasing and is at least the demand of
regular ones.
How many of each should be manufactured to maximize profit?
6. Polynesia’s gadget company
Polynesia Co. offers to the market two types of gadgets. Assembly and finishing departments are
in consideration regarding the nature of the production processes, and there are not more than 12
hours daily operation for each department. A gadget of the regular type requires 1 hour of assembly
and 2 hours of finishing, while a premium gadget needs 2 hours of assembly and 1 hour of
finishing. Due to other restrictions, Polynesia Co. can make at most 7 gadgets a day. A profit of
$20 is realized for each regular gadget and $30 for a premium gadget.
How many of each should be manufactured to maximize weekly profit?
Quantitative Methods for Business_ Ms. Dang Thi Uyen Thao 3

★★☆☆☆
7. Casablanca’s investment portfolio
Mr. Casablanca has decided to invest $60,000 per year in the stock market. The Russian invasion
of Ukraine has posed a negative impact on equity markets while leading to a surge in crude oil and
agricultural commodities, therefore under his consideration are oil and gas sector and agriculture
stocks.
Although a long-range goal is to get the highest possible return, some consideration is given to
the risk involved with the stocks. A risk index on a scale of 1–10 (with 10 being the riskiest) is
assigned to each of the two stocks. The total risk of the portfolio is found by multiplying the risk
of each stock by the dollars invested in that stock.
The following table provides a summary of the return and risk:
Stock Estimated Return Risk Index
Oil and gas 11% 9
Agriculture 6% 5
Option 1: Mr. Casablanca gives greater emphasis to the investment return while maintaining the
average risk index of 6 at most
Option 2: Mr. Casablanca gives greater emphasis to the risk of the investment while maintaining
a return of 8% at least
a. Solve the LP problem for both options
b. Calculate the average risk and the estimated return for both investment options. Which
options should Mr. Casablanca opt for?
8. Nairobi’s gadget company
Nairobi Co. produces three grades of gasoline— Regular, Premium, and Super. All of these are
produced by blending two types of crude oil— Crude A and Crude B. The two types of crude
contain specific ingredients which help in determining the octane rating of gasoline. The important
ingredients and the costs are contained in the following table:
Crude A Crude B
Cost per gallon $0.4 $0.47
Ingredient 1 40% 52%
Other ingredients 60% 48%
To achieve the desired octane ratings, at least 41%, 44% and 48% of Regular, Premium and Super
gasoline should be Ingredient 1, respectively. Due to current contract commitments, Nairobi Co.
must produce as least 20,000; 15,000 and 10,000 gallons of Regular, Premium and Super,
respectively
Solve the LP problem. How much of Crude A and Crude B are used in each gallon of the different
types of gasoline?
9. Havana‘s Accessories in Cuba
Quantitative Methods for Business_ Ms. Dang Thi Uyen Thao 4

Ms. Havana- the owner of an accessories store located in Cuba decided to limit her monthly
investment spending at most $100,000 on laptop cooling stands and docking stations, on average.
Ms. Havana got the offer from wholesalers at $1000 and $1500 for each laptop stand and docking
station, respectively. The contribution per laptop stand is $400 and of per docking station is $700.
Based on historical records, Ms. Havana estimates that at least 15 cooling stands but no more than
80 are sold each month on average. She also states that the demand of cooling stand is at most
double the demand of docking station. How many cooling stands and docking stations should be
sold to maximize the quarterly profit?
10. Santiago’s injection molding
Santiago Co. provides excellent service and high-quality injection molding solutions in Chile. It
relies on molding process technologies to meet the precision and performance requirements, since
a qualified custom molder includes one injection-molding machine with their two fitting dies. Due
to differences in cycle times, cavity (part) configuration, the die A can produce 100 units of
120 litre wheelie bins in 6 hours, while the die B can produce the same quantity
of 160 litre wheelie bins in 5 hours. Although Santiago operates on ordering scheme, it operates at
most 60 hours of production per week. After producing, wheelie bins are stored in a 15,000 cubic
feet stockroom, in which a unit of 120 litre wheelie bin requires 10 cubic feet of space and a
160 litre wheelie requires 20 cubic feet. The contribution of the 120 and 160 litre wheelie bins are
$5 and $4.5 per unit. However, the weekly demand of 120 litre wheelie bin is not more than 800
units based on historical data observed.
How many units of each type should be produced each week to maximize the total contribution?
Injection molding is a method to obtain molded products by injecting plastic materials molten by heat
into a mold, and then cooling and solidifying them. The method is suitable for the mass production of
products with complicated shapes, and takes a large part in the area of plastic processing.

★★★☆☆
11. Another Havana‘s Accessories in Cuba
Quantitative Methods for Business_ Ms. Dang Thi Uyen Thao 5

Ms. Havana- the owner of an accessories store located in Cuba decided to limit her monthly
investment spending at most $100,000 on laptop cooling stands and docking stations, on average.
Ms. Havana got the offer from wholesalers at $1000 and $1500 for each laptop stand and docking
station, respectively. The contribution per laptop stand is $400 and of per docking station is $700.
Based on historical records, Ms. Havana estimates that at least 15 cooling stands but no more than
80 are sold each month on average. She also states that the demand of cooling stand doubles the
one of docking station.
How many cooling stands and docking stations should be sold to maximize the quarterly profit?
12. Another Santiago’s injection molding
Santiago Co. provides excellent service and high-quality injection molding solutions in Chile. It
relies on molding process technologies to meet the precision and performance requirements, since
a qualified custom molder includes one injection-molding machine with their two fitting dies. Due
to differences in cycle times, cavity (part) configuration, the die A can produce 100 units of
120 litre wheelie bins in 6 hours, while the die B can produce the same quantity
of 160 litre wheelie bins in 5 hours. Although Santiago operates on ordering scheme, it operates
about 60 hours of production per week on average. After producing, wheelie bins are stored in a
15,000 cubic feet stockroom, in which a unit of 120 litre wheelie bin requires 10 cubic feet of
space and a 160 litre wheelie requires 20 cubic feet. The contribution of the 120 and
160 litre wheelie bins are $5 and $4.5 per unit. However, the weekly demand of 120 litre wheelie
bin is not more than 800 units based on historical data observed.
How many units of each type should be produced each week to maximize the total contribution?

★★★★☆
13. Petra‘s Portfolio Selection
Mr. Petra, a portfolio manager, in charge of a Jordan bank portfolio has $20,000 to invest. The
securities available for purchase, as well as their respective quality ratings are provided as
followed: A municipal bond A rated “Aaa” by Moody’s offers an after-tax yield of 2%; a
government bond B rated “Aa1” and a municipal bond C rated “Baa2” by Moody’s offer after-tax
yields of 4% and 5%, respectively. To be on the safe side, Petra invests no more than $3000 in the
riskiest security and at least twice as much as in the safest security than in the medium-ranged
risky security. If the rates hold till the end of the year and Mr. Petra is required to utilize most of
the invested amount of $20,000, what amounts should Mr. Petra invest in each security to
maximize the year end return?
A bond rating is given to a bond by a rating service (Moody’s is one of the most internationally well-known)
to indicate its credit quality and riskiness, while taking into consideration a bond issuer's financial strength or its
ability to pay returns to investors in a timely fashion. Generally, a "AAA" high-grade rated bond offers more security
and lower profit potential (lower yield) than a "B-" rated speculative bond. Investment-grade bonds contain “Aaa”
to “Baa3” (for Moody’s rating scale) ratings and will usually see bond yields increase as ratings decrease.
Quantitative Methods for Business_ Ms. Dang Thi Uyen Thao 6

14. Bhutan Cast iron

Cast iron is made from pig iron, which is the product of melting iron ore in a blast furnace. Cast
iron can be made directly from the molten pig iron or by re-melting pig iron, often along with
substantial quantities of iron, steel, limestone, carbon (coke) and taking various steps to remove
undesirable contaminants. Depending on the application, carbon, manganese and silicon content
are adjusted to the desired levels. If desired, other elements are then added to the melt before the
final form is produced by casting. After melting is complete, the molten cast iron is poured into a
holding furnace or ladle.

Bhutan Co. possesses special systems enabling them to move castings into production quickly
whenever they have a purchase order for a new product launch. Last week, Bhutan Co. received
an order to produce 1000 pounds of castings, and don’t intend to hold any remaining supply on
hand. The element content requirements are adjusted to clients’ desired levels: not less than 0.55
percent manganese and from 3.25 to 5.50 percent silicon. Bhutan Co. offers their clients a
competitive selling price at $0.45 per pound to stay connected to their clients long after.

From the last order, there are still about 1 pound of pure manganese at the cost of $8/pound on
hand that will be added directly to the melt. The foundry has two types of pig iron available in
essentially unlimited amounts, with the following properties provided in the table below. Bhutan
first includes all unused available substance and then makes an expenditure of 0.5 cents to melt
down a pound of pig iron.

A B
Silicon 4% 1%
Quantitative Methods for Business_ Ms. Dang Thi Uyen Thao 7

Manganese 0.45% 0.5%

Cost per thousand pounds $21 $25

What are the input quantities should the foundry produce the castings to maximize Bhutan
Co. profit?

** The cent is a monetary unit that equals 1⁄100 of the basic monetary unit

15. Marks and Spencer Supply chain

Marks and Spencer Group Plc (commonly abbreviated to M&S) is a major British multinational
retailer that specializes in selling clothing, home products and food products, mostly of its own
label. M&S don’t own any farms or factories or make the products that are sold in their stores, but
their products are made exclusively. The reputation for quality, innovation and sustainability is
built on excellent long-term relationships with their suppliers.

Considering clothing and home category, some unique products are manufactured by only 2
factories, namely Soapworks Ltd located in Glasgow, and Trowbridge Ltd located in
Southampton. From these 2 factories, beauty and personal care products are to be delivered to the
three M&S stores situated in Manchester, Nottingham and Derby. The nature of the portfolio
means that production volumes are not always constant, where large variations are driven by
seasonality and variations in customer demand. However, based on the historical report, the
weekly inventory requirements of the M&S stores in Manchester, Nottingham and Derby are
estimated about 42, 56, and 53 beauty packages, respectively. The production capacity of
Soapworks and Trowbridge Ltd are 85 and 66 product packages. M&S provide individual factory
locations and cost of transportation per pack accordingly.

From/To Manchester Nottingham Derby

Soapworks in Glasgow 16 10 15
Trowbridge in Southampton 10 12 10

How could M&S manage their complex supply chain (how beauty packages in 3 stores are
sourced from 2 factories) to minimize the transportation expenditure?

★★★★★
Sensitivity Analysis
Quantitative Methods for Business_ Ms. Dang Thi Uyen Thao 8