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CH1 Assignment

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5 views

CH1 Assignment

thanks

Uploaded by

Ahmed Mousa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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CH1

Q1- A retail store in Des Moines, Iowa, receives shipments of a particular product
from Kansas
City and Minneapolis. Let
x _ units of product received from Kansas City
y _ units of product received from Minneapolis
a. Write an expression for the total units of product received by the retail store in Des
Moines.
b. Shipments from Kansas City cost $0.20 per unit, and shipments from Minneapolis
cost $0.25 per unit. Develop an objective function representing the total cost of
shipments to Des Moines.
c. Assuming the monthly demand at the retail store is 5000 units, develop a constraint
that requires 5000 units to be shipped to Des Moines.
d. No more than 4000 units can be shipped from Kansas City and no more than 3000
units can be shipped from Minneapolis 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 Des Moines retail store at minimum cost.

Q2- For most products, higher prices result in a decreased demand, whereas lower
prices result in an increased demand (economists refer to such products as
normal goods). Let
d _ annual demand for a product in units
p _ price per unit
Assume that a firm accepts the following price–demand relationship as being
realistic representation of its market:
d _ 800 _ 10p
where p must be between $20 and $70.
a. How many units can the firm sell at the $20 per-unit price? At the $70 per-unit
price?
b. What happens to annual units demanded for the product if the firm increases the
per unit price from $26 to $27? From $42 to $43? From $68 to $69? What is the
suggested relationship between per-unit price and annual demand for the product
in units?
c. Show the mathematical model for the total revenue (TR), which is the annual
demand multiplied by the unit price.
d. Based on other considerations; the firm’s management will only consider price
alternatives of $30, $40, and $50. Use your model from part (b) to determine the
price alternative that will maximize the total revenue.
e. What are the expected annual demand and the total revenue according to your
recommended price?
Q3- The O’Neill Shoe Manufacturing Company will produce a special-style shoe if
the order size is large enough to provide a reasonable profit. For each special
style order, the company incurs a fixed cost of $2000 for the production setup.
The variable cost is $60 per pair, and each pair sells for $80.
a. Let x indicate the number of pairs of shoes produced. Develop a mathematical
model for the total cost of producing x pairs of shoes.
b. Let P indicate the total profit. Develop a mathematical model for the total profit
realized from an order for x pairs of shoes.
c. What is the breakeven point?

Q4- Micromedia offers computer training seminars on a variety of topics. In the


seminars each student works at a personal computer, practicing the particular
activity that the instructor is presenting. Micromedia is currently planning a two-
day seminar on the use of Microsoft Excel in statistical analysis. The projected fee
for the seminar is $600 per student. The cost for the conference room, instructor
compensation, lab assistants, and promotion is $9600.
Micromedia rents computers for its seminars at a cost of $60 per computer per day.
a. Develop a model for the total cost to put on the seminar. Let x represent the
number of students who enroll in the seminar.
b. Develop a model for the total profit if x students enroll in the seminar.
c. Micromedia has forecasted an enrollment of 30 students for the seminar. How
much profit will be earned if its forecast is accurate?
d. Compute the breakeven point.
Q5- Eastman 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 $160,000.
Variable production and material costs are estimated to be $6 per book. Demand
over the life of the book is estimated to be 4000 copies.
The publisher plans to sell the text to college and university bookstores for $46 each.
a. What is the breakeven point?
b. What profit or loss can be anticipated with a demand of 3500 copies?
c. With a demand of 3500 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 $50.95 and
not affect the anticipated demand of 4000 copies, what action would you
recommend?
e. What profit or loss can be anticipated?

Q6- Preliminary plans are underway for construction of a new stadium for a major
league baseball team. City officials question the number and profitability of the
luxury corporate boxes planned for the upper deck of the stadium. Corporations
and selected individuals may purchase a box for $300,000. The fixed
construction cost for the upper-deck area is estimated to be $4,500,000, with a
variable cost of $150,000 for each box constructed.
a. What is the breakeven point for the number of luxury boxes in the new stadium?
b. Preliminary drawings for the stadium show that space is available for the
construction of up to 50 luxury boxes. Promoters indicate that buyers are
available and that all 50 could be sold if constructed. What is your
recommendation concerning the construction of luxury boxes? What profit is
anticipated?

You can review Ch1 Self-Test in the book on BB


from Page 35 to page 37.

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