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Lab 1

This document outlines 4 quantitative problems related to production, costs, profits, and breakeven analysis. Problem 1 involves developing a mathematical model to maximize profits from two products given constraints on resources and production units. Problem 2 develops a model to minimize shipping costs given constraints on supply and demand. Problem 3 models the costs and profits from organic tomato production. Problem 4 examines the breakeven point, profits, minimum price, and potential profits if price is increased for a textbook given estimates of fixed costs, variable costs, and demand.

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54 views2 pages

Lab 1

This document outlines 4 quantitative problems related to production, costs, profits, and breakeven analysis. Problem 1 involves developing a mathematical model to maximize profits from two products given constraints on resources and production units. Problem 2 develops a model to minimize shipping costs given constraints on supply and demand. Problem 3 models the costs and profits from organic tomato production. Problem 4 examines the breakeven point, profits, minimum price, and potential profits if price is increased for a textbook given estimates of fixed costs, variable costs, and demand.

Uploaded by

Nur
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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PPT4801 Quantitative Techniques in Agribusiness

SEM 2 2022/23
LAB 1
1. Recall the production model in lecture notes:

Max 10x
s.t.
5x ≤ 40
x≤0

Suppose the firm in this example considers a second product that has a unit profit of $5 and
requires 2 hours of production time for each unit produced. Use y as the number of units of
product 2 produced.

a. Show the mathematical model when both products are considered simultaneously.
b. Identify the controllable and uncontrollable inputs for this model.
c. Draw the flowchart of the input-output process for this model.
d. What are the optimal solution values of x and y?
e. Is the model developed in part (a) a deterministic or a stochastic model? Explain.

2. A retail store in Bukit Bintang, receives shipments of a particular product from IOI Puchong and
The Mines. Let

x = number of units of the product received from IOI Puchong


y = number of units of the product received from The Mines

a. Write an expression for the total number of units of the product received by the retail store in
Bukit Bintang.
b. Shipments from IOI Puchong cost RM0.20 per unit, and shipments from The Mines cost
RM0.25 per unit. Develop an objective function representing the total cost of shipments to
Bukit Bintang.
c. Assuming the monthly demand at the retail store is 5,000 units, develop a constraint that
requires 5,000 units to be shipped to Bukit Bintang.
d. No more than 4,000 units can be shipped from IOI Puchong, and no more than 3,000 unit can
be shipped from The Mines in a month. Develop constraints to model this situation.
e. Of course, negative amounts cannot be shipped. Combine the objective function and
constraints developed to state a mathematical model for satisfying the demand at the Bukit
Bintang retail store at minimum cost.
3. The Alibaba Organic Vegetable Farming Company will produce an organic tomato if the order
size is large enough to provide a reasonable profit. For each organic tomato order, the company
incurs a fixed cost of RM 1,000 for the production setup. The variable cost is RM30 per kilogram
and each kilogram sells for RM 40.
a. Let x indicate the kilogram (kg) of organic tomato produced. Develop a mathematical
model for the total cost of producing x kg of organic tomato.
b. Let P indicate the total profit. Develop a mathematical model for the total profit realized
from an order for x kg of organic tomato.
c. How large must the organic tomato order be before Alibaba will break even?

4. Cengage Learning Publishing Company is considering publishing a paperback textbook on


spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design,
and production setup is estimated to be RM 80,000. Variable production and material cost are
estimated to be RM3 per book. Demand over the life of the book is estimated to be 4,000 copies.
The publisher plans to sell the text to college and university bookstores for RM 20 each.

a. What is the breakeven point?


b. What profit or loss can be anticipated with a demand of 4,000 copies?
c. With a demand of 4,000 copies, what is the minimum price per copy that the publisher must
charge to break even?
d. If the publisher believes that the price per copy could be increased to RM 25.95 and not affect
the anticipated demand of 4,000 copies, what action would you recommend? What profit or
loss can be anticipated?

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