ASSIGNMENT I

1. Bekas Chemicals Company manufactures two chemicals A and B which are sold to the

manufacturers of soaps and detergents. On the basis of the next month’s demand, the

management has decided that the total production of chemicals A and B should be at least

350 kilograms. Moreover, a major customer order for 125 kilograms of product A must also

be supplied. Product A requires 2 hours of processing time per kilogram and product B

requires one hour of processing time per kilogram. For the coming month, 600 hours of

processing time are available. For the coming month, 600 hours of processing time are

available. The company wants to meet the above requirements at minimum total production

cost. The production costs are birr 2 per kilogram for product A and birr 3 per kilogram for

product B. Bekas chemicals company wants to determine its optimal product mix and the

total minimum cost relevant thereto.

A. Formulate the above as a linear programming problem

B. Solve the problem with the graphical method

C. Does the problem have multiple optimal solutions? Why?

2. A company produces three products, P1, P2 and P3 from two raw materials A and B, and labor L.

one unit of product p1 requires one unit of A, 3 units of B and 2 units of L. one unit of product P2

requires 2 units of A and B each, and 3 units of L, while one unit of P3 needs 2 unit of A, 6 units of

B and 4 units of L. The company has a daily availability of 8 units of A,12 units of B and 12 units of

L. it is further known that the unit contribution margin for the products is birr 3,2 and 5 respectively

for P1,P2 and P3.formulate this problem as a LPP.

Business mathematics Assignment I&II

phosphate fertilizer and not less than 7200 kg of a special nitrogen fertilizer to raise productivity of

crops in his fields. There are two sources for obtaining these-mixtures A and B. both of these are

available in bags weighting 100 kg each and they cost birr 40 and birr 24 respectively. Mixture A

contains phosphate and nitrogen equivalent of 20kg and 80kg respectively, while mixture B contains

these ingredients equivalent of 50 kg each. Write this as a linear programming problem and determine

how many bags of each type the farmer should buy in order to obtain the required fertilizer at

minimum cost.

4. A furniture manufacturer produces two types of desks: standard and executive. These desks are sold

to an office furniture wholesaler and for all practical purposes, there in an unlimited market for any

mix of these desks, at least within the manufacturer’s production capacity. Each desk has to go

through four basic operations: cutting of the limber, joining of the pieces, pre-finishing and final

finish. Each units of the standard desk produced takes 48 minutes of cutting time, 2 hours of joining,

40 minutes of pre-finishing and 4 hours of final finishing time. Each unit of the executive desk

requires 72 minutes of cutting, 3 hour of joining, 2 hours of pre-finishing and 5 hours and 20 minutes

of final finishing time. The daily capacity for each operation amounts to 16 hours of cutting, 30 hours

of joining, 16 hours of pre-finishing and 64 hours of final finishing time. The profit per unit produced

is birr 40 for the standard desk and birr 50 for the executive desk. Determine the product mixes that

maximize the total revenue.

5. A company manufactures two kinds of machine, each requiring a different manufacturing technique.

The deluxe machine requires 18 hours of labour, 9 hour of testing and yield a profit of birr 400. The

standard machine requires 3 hours of labour, 4 hour of testing and yield a profit of birr 200. There are

800 hours of labour and 600 hours of testing available each month. A marketing forecast has shown

the monthly demand for the standard machine to be no more than 150. Management wants to know

the number of each model to be produce monthly that will maximize total profit. Formulate and solve

this as LPP.

Business mathematics Assignment I&II

takes place in two separate departments. Refrigerators are produced in department I and ranges are

produced in department II. The company’s two products are produced and sold on weekly basis. The

weekly production cannot exceed 25 refrigerators in department I and 35 ranges in department II,

because of the limited available facilities in these two departments. The company regularly employs a

total of 60 workers in two departments. A refrigerator requires 2 man weeks of labour, while a range

requires one week of labour. A refrigerator contributes a profit of birr 60 and a range contribute a

profit of birr 40. How many units of refrigerators and ranges should the company produce to realize a

maximum profit?

ASSIGNMENT II

1. A variable cost of the product manufactured by the company is birr 4. The company, which

sells its product to retailers for a birr 10, expects its net profit for the year just ended to be

birr 270,000 after allowing for fixed cost of birr 90,000. Annual sales are 60,000 products per

year. The productive capacity of the company is underutilized and the marketing manager

suggests that a 10% reduction in selling price will bring about 25% increases in sales.

A. What level of sales is necessary to break even?

B. Calculate the sales revenue at this volume of sales?

C. Calculate the sales revenue resulting from implementing the marketing manager’s

proposal?

D. As a result of increased volume, by how much has revenue changed?

E. Should the company reduce selling price by 10%?

2. Suppose three companies: A, B and C dominate the market for a certain product and are

competing against each other for a large share of the market. Currently company A has 2/9 of

Business mathematics Assignment I&II

market survey indicates that every 6 months company A retains ¾ of its customer and loss

1/6 to company B and 1/12 to company C. Company B retains ½ of its customer and loss 1/3

to company A and 1/6 to company C. Company C retains 3/8 of its customer and loss ¼ to

company A and 3/8 to company C retains 3/8 to company C. Find the share of the market

that each company will have i) one year later

3. An employee has contributed with her employer to a retirement program for 20 years a

certain amount twice a year. The contribution earns an interest rate of 10% compounded

semiannually. At the time of retirement the total retirement benefit is birr 300,000. The

retirement program provides for investment of this amount at an interest rate of 10%

compounded semiannually. Semiannual payment will be made for 20 years to the employee

or her family in the event of her death.

A. What semiannual payment should she make?

B. What semiannual payment should be made for her?

C. How much interest will be earned on birr 300,000 over the 40 years?

4. Ato Tefera purchased a house for birr 2,500,000. He made a 20% down payment, with a

balance to be amortized by a 30 year mortgage annual interest of 12% compounded monthly.

A. What amount of money of his monthly mortgage payment?

B. What is the total amount of interest Ato Tefera will pay over the life of the mortgage?

C. Determine the amount of mortgage Ato Tefera will have paid after 10 years?

D. What will be Ato Tefera’s equity in the house at the end of 10 years?

Business mathematics Assignment I&II