Management Science Tutorial 1

Formulation of Linear Programming (LP)

Models Formulate the following LP models

1. Electrocomp Corporation manufactures two electrical products: air conditioners and large fans.
The assembly process for each is similar in that both require a certain amount of wiring and drilling
times. Each air conditioner takes 3 hours of wiring and 2 hours of drilling. Each fan must go through
2 hours of wiring and 1 hour of drilling. During the next production period, 240 hours of wiring time
are available and up to 140 hours of drilling time may be used. Each air conditioner sold yields a
profit of RM25 and each fan sold yields a profit of RM15.

2. In (1), What if Electrocomp decides that at least 20 air conditioners should be produced but no
more than 80 fans should be produced?

3. The Outdoor Furniture Corporation manufactures two products, benches and picnic tables, for use
in yards and parks. The firm has two main resources: its carpenters (labor force) and a supply of
redwood for use in the furniture. During the next production cycle, 1,200 hours of labor are
available under a union agreement. The firm also has a stock of 3,500 feet of good-quality
redwood. Each bench that Outdoor Furniture produces requires 4 labor hours and 10 feet of
redwood; each picnic table takes 6 labor hours and 35 feet of redwood. The cost of producing a
bench is RM50 and the cost for a chair is RM 60. Completed benches will be sold at RM100 each,
and tables will be sold at RM200 each.

4. The dean of the Western College of Business must plan the school’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 college an average of RM2,500 in faculty wages, and each
graduate course costs RM3,000.

5. A candidate for mayor in a small town has allocated RM1000,000 for last-minute advertising in
the days preceding the election. Three types of ads will be used: radio, newspaper, and television.
Each radio ad costs RM2000 and reaches an estimated 3,000 people. Each newspaper ad costs
RM1000 and reaches an estimated 1,000 people. Each television ad costs RM5000 and reaches an
estimated 7,000 people. In planning the advertising campaign, the campaign manager would like
to reach as many people as possible, but she has stipulated that at least 10 ads of each type must
be used. Also, the number of radio ads must be at least as great as the number of television ads.
How many ads of each type should be used? How many people will this reach?

6. MSA Computer Corporation manufactures two models of minicomputers, the Alpha 4 and the
Beta 5. The firm employs five technicians, working 160 hours each per month, on its assembly
line. Management insists that full employment (i.e., all 160 hours of time) be maintained for each
worker during next month’s operations. It requires 20 labor hours to assemble each Alpha 4
computer and 25 labor hours to assemble each Beta 5 model. MSA wants to see at least 10 Alpha
4s and at least 15 Beta 5s produced during the production period. Alpha 4s generate RM1,200
profit per unit, and Beta 5s yield RM1,800 each.
 Management Science Tutorial 1

7. Woofer Pet Foods produces a low-calorie cat food for overweight cats. This product is made from
beef products and grain. One kg of beef costs RM5, and one kg of grain costs RM2. One kg of the
cat food must contain at least 9 units of Vitamin 1 and 10 units of Vitamin 2. One kg of beef
contains 10 units of Vitamin 1 and 12 units of Vitamin 2. One kg of grain contains 6 units of
Vitamin 1 and 9 units of Vitamin 2.

8. The seasonal yield of olives in a Piraeus, Greece, vineyard is greatly influenced by a process of
branch pruning. If olive trees are pruned every two weeks, output is increased. The pruning
process, however, requires considerably more labor than permitting the olives to grow on their
own in a smaller size olive. It also, though, permits olive trees to be spaced closer together. The
yield of 1 barrel of olives by pruning requires 5 hours of labor and 1 acre of land. The production
of a barrel of olives by the normal process requires only 2 labor hours but takes 2 acres of land.
An olive grower has 250 hours of labor available and a total of 150 acres for growing. Because of
the olive size difference, a barrel of olives produced on pruned trees sells for RM20, whereas a
barrel of regular olives has a market price of RM30

9. Raptor Fuels 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 litter RM0.42 RM0.47
Ingredient 1 40% 52%
Other ingredients 60% 48%

In order to achieve the desired octane ratings, at least 41% of Regular gasoline should be
Ingredient 1; at least 44% of Premium gasoline must be Ingredient 1, and at least 48% of Super
gasoline must be Ingredient 1. Due to current contract commitments, Raptor Fuels must produce as
least 20,000 gallons of Regular, at least 15,000 gallons of Premium, and at least 10,000 gallons of
Super.

10. A winner of the Texas Lotto has decided to invest $50,000 per year in the stock market. Under
consideration are stocks for a petrochemical firm and a public utility. 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 most risky) 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 is a summary of the return and risk.

Stock Estimated Return Risk Index

The investor would like to maximize the return on the investment, but the average risk index of the
vestment should not be higher than 6. How much should be invested in each stock? What is the
average risk for this investment? What is the estimated return for this investment?