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Assignment 1

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Mushfiqul Islam
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6 views

Assignment 1

Uploaded by

Mushfiqul Islam
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Assignment# 1

Submission: before next class. Assignment should be hand-written. Convert your


hand-written assignment into a single PDF and then submit to the Google classroom.

Q1. Suppose that a manager has a choice between the following two mathematical models of a given
situation: (a) a relatively simple model that is a reasonable approximation of the real situation, and (b) a
thorough and complex model that is the most accurate mathematical representation of the real situation
possible. Why might the model described in part (a) be preferred by the manager?

Q2. The ABC Company has been a producer of picture tubes for television sets and certain printed circuits
for radios. The company has just explained into full scale production and marketing of AM and AM-FM
radios. It has built a new plant that can operate 48 hours per week. Production of an AM radio in the new
plant will require 2 hours and production of an AM-FM radio will require 3 hours. Each AM radio will
contribute Tk. 40 to profits while an AM-FM radio will contribute Tk. 80 to profits. The marketing
departments, after extensive research, have determined that a maximum of 15 AM radios and 10 AM-FM
radios can be sold each week.

A. What would be the uncontrollable inputs?


B. What would be the decision variables of the mathematical model? The objective function?
The constraints?
C. Suggest assumptions that could be made to simplify the model.
D. Is the model deterministic or stochastic?
E. Draw the flowchart of the input-output process for this model.

Use Goal-Seek tool if required

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
$1000 for the production setup. The variable cost is $30 per pair, and each pair sells for $40.
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. With a demand of 400 pairs of shoes, what is the minimum price per pairs of shoes that the
manufacturer must charge to break even?

Q4. There is a fixed cost of $50,000 to start a production process. Once the process has begun, the
variable cost per unit is $25. The revenue per unit is projected to be $45.
a. Write an expression for total cost.
b. Write an expression for total revenue.
c. Write an expression for total profit.
d. Find the break-even 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 $80,000. Variable production and material costs are estimated to be $3 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 $20 each.
a. What is the breakeven point?
b. What profit or loss can be anticipated with a demand of 4000 copies?
c. With a demand of 4000 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 $25.95 and not affect
the anticipated demand of 4000 copies, what action would you recommend? What profit or loss
can be anticipated?

Q6. In this portion of an Excel spreadsheet, the user has given values for selling price, the costs, and a
sample volume. Give the cell formula for
a. cell E12, break-even volume.
b. cell E16, total revenue.
c. cell E17, total cost.
d. cell E19, profit/loss.

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