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OR5 Odt

The document describes a linear programming problem to maximize total expected profit for two new product lines - special risk insurance and mortgages - by establishing sales quotas, with constraints on work requirements and individual product quotas. It provides the objective function and constraints to formulate the linear programming model and asks to solve it using the simplex algorithm.

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Wajini Lakshika
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29 views1 page

OR5 Odt

The document describes a linear programming problem to maximize total expected profit for two new product lines - special risk insurance and mortgages - by establishing sales quotas, with constraints on work requirements and individual product quotas. It provides the objective function and constraints to formulate the linear programming model and asks to solve it using the simplex algorithm.

Uploaded by

Wajini Lakshika
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as ODT, PDF, TXT or read online on Scribd
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1.

The Primo Insurance Company is introducing two new product lines: special risk insurance and
mortgages. The expected profit is $5 per unit on special risk insurance and $2 per unit on mortgages.

Management wishes to establish sales quotas for the new product lines to maximize total expected
profit. The work requirements are as follows:

Formulate a linear programming model for this problem.

Solution:

Decision variable:

X1 = Special risk

X2 = Mortgage

Objective function:

Maximize

Z = $5X1 + $2X2

Subject to:

3X1 + 2X2 <= 2400

X2 <= 800

2X1 <= 1200

X1 >= 0 , X2 >= 0

4. Solve the following problem by simplex algorithm.

Maximize Z = 3x1 + 5x2 + 6x3


Subject to 2x1 + x2 + x3 ≤ 4
x1 + 2x2 + x3 ≤ 4
x1 + x2 + 2x3 ≤ 4
x1 + x2 + x3 ≤ 3
and x1, x2, x3 ≥ 0

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