MGMT 3106: Management Science and Operations Management

Assignment 4

Task: Answer following questions

For the following problems (except Q1), formulate Linear Programs clearly describing variables,
objective function, and constraints.

Decision variables must be defined clearly. Decision variables should be named with a lower case
English letter (and, optionally a number).

Decision variables should quantify the decision. For example, “x = cups” does not quantify the decision
whereas “x = number of cups” quantifies the decision.

Objective function must be a mathematical expression. Objective function should be expressed in

terms of the decision variables.

Constraints must be mathematical expressions. Constraints should also be expressed in terms of the
decision variables.

Solve the problems using Excel Solver or LP Solve. Show all your work by providing screen captures of
the solutions to earn credit.

If Excel Solver is used, screen captures of Excel Solver model and the Excel Solver parameters must be
shown.

If LP Solve is used, screen captures of the model and solution must be shown.
MGMT 3106: Management Science and Operations Management

1. [10 points] Describe a recent decision you made that could be viewed from an optimization
perspective. What were the “decision variables”? What was the objective? What were the
constraints? Did you have more than one objective? Describe in 100 – 200 words.
Recently, I decided to invest in a new computer. The reason for this was my previous computer was
old and very outdated. Since I spend a good amount of time using my computer, I decided to get a
top of line computer built. Because a computer needs varies different components (motherboard,
power supply, fans, gpu, cpu, monitor, keyboard, and mouse) the investment was expensive. The
decision variables were the price of each component and how much the labor and shipping cost
would add to the price of a computer. I ponder rather it’ll be to better to continue using my outdate
computer or update to prebuilt computer.

2. [30 points] TriStar Manufacturing makes three models of fans, identified by the unimaginative
names of A, B, and C. The fans are made from nuts, bolts, wire, blades, and motors. The current
inventory levels and parts list for each type of fan is shown in the table below. Profits from Fan A are
$35, Fan B profit is $50, and Fan C profit is $60. TriStar Manufacturing wants to know the best
product mix to maximize the revenue.

Fan A Fan B Fan C

Component # Needed # Needed # Needed Current Inventory
Wire 5 6 10 8000
Nuts 8 7 15 12000
Bolts 8 10 12 10000
Motor 1 1 1 1500
Blades 3 5 5 7500

a. What are decision variables for this problem? What is the objective function for this problem?
To determine which fan configuration would maximize the most profit without using too many
components. Objective Function: Z = 35x+ 50y + 60z
b. What are the constraints for this problem? Express them as mathematical relationships.
The constraints would be each component and the current inventory remaining.
Wire: 5x + 6y + 10z < 8000
Nuts: 8x+ 7y + 15z < 12000
Bolts: 8x + 10y + 12y < 1500
Blades: 3x + 5y + 5y < 7500
c. Solve the problem using Excel Solver or LP Solve. How many of each type to make so as to
maximize profits? Show screen captures to earn full credit. If you used Excel Solver, a screen
capture of the Solver parameters must be shown to earn full credit.
d. How much profit does the manufacturer earn with optimal production quantities?

2. [30 points] Cookie Co is a commercial bakery that produces specialty cookies. Their recipe must
meet minimum nutrition standards that state that the cookie dough mix should have at most 40.5%
sugar, at least 5.5% protein, at most 31.0% fat, and at least 8.0% fiber. The available ingredients and
their compositions are shown in the table below, along with their costs (in $/kg).

Ingredient Sugar (%) Protein (%) Fat (%) Fiber (%) Cost ($/kg)
Berries 14.4 1.8 4.9 23.4 3.0
Wheat 12.3 3.8 3.0 12.7 2.0
Oats 20.0 8.8 11.2 29.3 2.3
MGMT 3106: Management Science and Operations Management

Seeds 20.8 9.7 13.8 21.0 2.7

Molasses 2.9 0.0 0.2 6.5 6.1
Protein powder 0.0 40.0 0.0 0.0 1.0

Fruit is hard to keep fresh, so Cookie Co wants berries to account for no more than 15% of the total
mixture. Furthermore, Cookie Co has a partnership with a sustainable oats manufacturer and wants
the mixture to have at least 5% oats. Finally, the amount of money spent on protein powder should
be less than or equal to the amount of money spent on seeds. Cookie Co wants to minimize the cost
of ingredients of the cookie dough mix.
a. What are decision variables for the problem? What is the objective function for this problem?
b. What are the constraints for the problem?
c. Solve the problem using Excel Solver or LP Solve. How should Cookie Co mix a 1 kg bag of
cookie dough mix to minimize the cost of the ingredients?
d. How many kg of each ingredient should they use?

3. [30 points] Deshaun wants to create a diverse portfolio for his retirement account. He has set aside
$6,000 this year. He has selected five investment options. It is estimated that each dollar invested in
stock market, real estate, mutual funds, commodities, government bonds yield (per year) 7, 10, 5, 6,
3 cents, respectively. His objective is to earn high yield in the next year. However, with each
investment, there is a risk. Therefore, Deshaun has decided to use following rules to reduce the risk
of his investments:
 The amount invested in real estate market cannot exceed the amount invested in
government bonds and mutual funds.
 The amount invested in commodities should be higher than the amount invested in real
estate.
 At least 20% of the total invested amount should be invested in government bonds.
 At least 10% of the total invested amount should be invested in the mutual funds.
 The amount invested in the stock market cannot exceed 25% of the total investment.

a. What are the variables and what is the objective function for this problem?
b. What are the constraints?
c. Solve the problem using Excel Solver or LP Solve. How much should be invested in each
investment option?
d. What is the return on investment?
e. If the amount available to invest is $10,000, would the invested percentages in (c) change or
not? Compare the percentages.
MGMT 3106: Management Science and Operations Management