MBA6307(01) Business Data Analysis & Decision Making

Midterm Take-Home Exam (Due on April 27 midnight, 2024)

Ÿ Each part of your algebraic and spreadsheet models should be explained in great detail and
step-by-step.
Ÿ The definition of each decision variable should be as clear, specific, and complete as possible.
Ÿ Optimal solutions obtained on spreadsheets should be explained verbally.
Ÿ All answers should be provided in a single well-organized document, and spreadsheets
produced should also be submitted as accompanying materials.
Ÿ Use appropriate and easily recognizable names for all submitted files.
Ÿ No discussion is allowed with other students and plagiarism is strictly prohibited. You have a
responsibility to show that your work is UNIQUE.

Problem 1. Dongguk Furniture Company (10 pt.)

The Dongguk Furniture Company builds two types of computer desks from coated wooden board.
The Superior model needs 50 square feet of wooden board, 2 keyboard trays, and 8 hours of labor
to assemble. Its selling price is $159. The Shiny model needs 35 square feet of wooden board, 1
keyboard tray, and 5 hours of labor to assemble. Its selling price is $135. In the next week, the
company can buy up to 25,000 ft2 of wooden board at $2.45 per ft2 and up to 800 keyboard trays
at a cost of $5.35 each. The company considers manufacturing labor as a fixed cost and has 4000
labor hours available in the next week for the assembly of these desks.

a. Formulate an optimization model for this problem algebraically.

b. Formulate and solve an optimization model for this problem on a spreadsheet.

Problem 2. Fire Stations (10 pt.)

Suppose that a city is considering the relocation of eight fire stations to improve fire protection in
several regions. The following table shows the potential locations for fire stations along with the
regions that can be covered from these locations are shown in the following table. The city wants to
find the minimum number of locations necessary to provide coverage to all regions.

Potential Locations for Stations Regions Covered

A 1, 2, 5, 7
B 1, 3, 5
C 2, 4, 6
D 1, 3, 5, 7
E 4, 5, 6, 7
F 2, 3, 7
G 1, 3, 4, 6
H 1, 3, 4, 6, 7

a. Formulate an optimization model for this problem algebraically.

b. Formulate and solve an optimization model for this problem on a spreadsheet.
Problem 3. Cargo Loading (20 pt.)

Andrew Karminsky is in charge of loading cargo ships for International Cargo Company (ICC) at
the port in Newport News, Virginia. Andrew is developing a cargo loading plan for an ICC
freighter destined for Ghana. A mineral commodities trader wants to transport the following
products aboard this ship.

Amount Volume per Ton Profit per Ton

Commodity
Available (tons) (cubic feet) ($)
1 4,800 40 70
2 2,500 25 50
3 1,200 60 60
4 1,700 55 80

Andrew can choose to load any and/or all of the available mineral commodities. But, the three
cargo holds of the ship are subject to the following capacity restrictions:

Cargo Hold Weight Capacity (tons) Volume Capacity (cubit feet)

Front 3,000 145,000
Middle 6,000 180,000
Back 4,000 155,000

The ship can place one or more than one type of mineral commodity in the same cargo hold.
However, considering stability, the weight of mineral commodities loaded in the front cargo hold
must be no more than 10% of the weight in the back cargo hold, and the weight of mineral
commodities loaded in the middle cargo hold must range between 40% and 60% of the total weight
on board.

a. Formulate an optimization model for this problem algebraically.

b. Formulate and solve an optimization model for this problem on a spreadsheet.
Problem 4. Leasing Storage Space (25 pt.)

The Sentry Lock Corporation sells a variety of electronic goods through television shows. The
company has a number of storages to keep the goods it sells, but also takes out a lease on
additional storage space when required. During the next 5 months the company anticipates that it is
going to need to take out a lease on the following amounts of additional storage space:

Month 1 2 3 4 5
Square Feet(ft2) Needed 20,000 30,000 40,000 35,000 50,000

In the beginning of any month the company can take out a lease on additional space for one or
more months at the following costs:

Lease Term (months) 1 2 3 4 5

Cost per Sq. Ft. Leased $55 $85 $130 $165 $185

Therefore, for example, in the beginning of month 1 the company can take out a lease on as much
space as it requires for four months at a cost of $165 per ft2. Similarly, in the beginning of month 3
it can take out a lease on any amount of space for two months at a cost of $85 per ft2. The
company needs to determine the optimal way of satisfying its storage requirements over the coming
five months.

a. Formulate an optimization model for this problem algebraically.

b. Formulate and solve an optimization model for this problem on a spreadsheet.
c. How much will it cost the company to satisfy its space requirements if in each month it takes
out a lease for one month exactly on the amount of space needed for the month?
Problem 5. Production and Transportation (10 pt.)

The Champion Mainframe Company produces mainframes in three plants and then ships them to
four areas of the country. The plants have limited production capacities as listed in the right
column of the table below. The demands by area are shown at the bottom of this table, and the
unit shipping costs from each plant to each area are shown in the middle of the table. Champion
needs to find an optimal shipping plan for satisfying the demands of the four areas without
exceeding the production capacities of the plants.

[Table 4.1] Input Data for the Problem

Area 1 Area 2 Area 3 Area 4 Capacity

Plant 1 131 218 266 120 450
Plant 2 250 116 263 278 600
Plant 3 178 132 122 180 500
Demand 450 200 300 300

a. Formulate an optimization model for this problem algebraically.

b. Formulate and solve an optimization model for this problem on a spreadsheet.

Problem 6. Lovely Apparel Company (20 pt.)

The Lovely Apparel Company produces shirts, shorts, pants, skirts, and jackets. The company needs
to have the appropriate type of equipment available for each type of clothing item. The equipment
(with unlimited weekly production capacity) required to produce each type of clothing item has to
be rented at the weekly rates shown in the following table. This table also shows the amounts of
cloth and labor needed per unit of clothing, as well as the sales price and the unit variable cost for
each type of clothing item.

Rental Cost Labor Hours Cloth (sq yd) Sales Price Unit Variable Cost
Shirts $1500 2.0 3.0 $35 $20
Shorts $1200 1.0 2.5 $40 $10
Pants $1600 6.0 4.0 $65 $25
Skirts $1500 4.0 4.5 $70 $30
Jackets $1600 8.0 5.5 $110 $35

There are 5000 labor hours and 5000 square yards (sq yd) of cloth available in a given week. The
company needs to find an optimal production plan that maximizes its weekly profit.

a. Formulate an optimization model for this problem algebraically.

b. Formulate and solve an optimization model for this problem on a spreadsheet.
Problem 7. Southwestern Foods (30 pt.)

Southwestern Foods has hired you to analyze their distribution-system design. The company has 11
distribution centers (DCs), with monthly volumes as listed here. Seven of these sites can support
warehouses, in terms of the infrastructure available, and are designated by (W).

Center Volume Center Volume

Atlanta (W) 5000 Memphis (W) 7800
Birmingham (W) 3000 Miami 4400
Columbia (W) 1400 Nashville (W) 6800
Jackson 2200 New Orleans 5800
Jacksonville 8800 Orlando (W) 2200
Louisville (W) 3000

The following table shows the cost per carton of shipping from any potential warehouse location to
any DC. Southwestern has standardized its warehouse design so that all such facilities can handle
up to 15,000 cartons in a month. In addition, the monthly fixed cost for operating one of these
warehouses is estimated at $3600. Southwestern could build warehouses at any of the designated
locations, but its criterion is to minimize the total of fixed operating costs and variable shipment costs.
Note that the company needs to determine where to locate warehouses and how many cartons
should be shipped from warehouses to 11 DCs.

Atl Bir Col Jac Jvl Lvl Mem Mia Nash NewO Orl
Atlanta 0.00 0.15 0.21 0.40 0.31 0.42 0.38 0.66 0.25 0.48 0.43
Birmingham 0.15 0.00 0.36 0.25 0.46 0.36 0.26 0.75 0.19 0.35 0.55
Columbia 0.21 0.36 0.00 0.60 0.30 0.50 0.62 0.64 0.44 0.69 0.44
Louisville 0.42 0.36 0.50 0.59 0.73 0.00 0.38 1.09 0.17 0.70 0.86
Memphis 0.38 0.26 0.62 0.21 0.69 0.38 0.00 1.00 0.21 0.41 0.78
Nashville 0.25 0.19 0.44 0.41 0.56 0.17 0.21 0.91 0.00 0.53 0.69
Orlando 0.43 0.55 0.44 0.70 0.14 0.86 0.78 0.23 0.69 0.65 0.00

a. What is the total distribution cost (fixed warehouse costs plus variable shipping costs) for the
optimal configuration? What is the optimal configuration of locations to use for the system?
b. Suppose the construction budget limits Southwestern to at most two locations but that the
standard warehouse is redesigned to accommodate up to 26,000 cartons. What is the optimal
total cost? Where should warehouses be located?
Problem 8. Staffing Nurses (15 pt.)
A hospital needs to determine how many nurses to hire to cover a 24-hour period. The nurses
must work 8 consecutive hours but can start work at the start of 6 different shifts (12 am – 8 am,
4 am – 12 pm, 8 am – 4 pm, 12 pm – 8 pm, 4 pm – 12 am, and 8 pm – 4 am). They are paid
different wages depending on when they start their shifts. The number of nurses required per
4-hour time period and their wages are shown in the following table.

Required # of Wage
Time period Nurses ($/hr)
12 am - 4 am 20 15
4 am - 8 am 30 16
8 am - 12 pm 40 13
12 pm - 4 pm 50 13
4 pm - 8 pm 40 14
8 pm - 12 am 30 15

a. Formulate an optimization model for this problem algebraically.

b. Formulate and solve an optimization model for this problem on a spreadsheet.