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Exercise Booklet

The document is an exercise booklet for a course on Quantitative Methods of Business Decisions, covering various topics in linear programming (LP), including model formulation, optimization techniques, dual equations, transportation models, and inventory management. It includes multiple exercises requiring the application of LP concepts, such as maximizing profit, minimizing costs, and determining optimal solutions using methods like the simplex and Hungarian methods. Additionally, it addresses practical scenarios involving production constraints, transportation logistics, and inventory policies.

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8 views

Exercise Booklet

The document is an exercise booklet for a course on Quantitative Methods of Business Decisions, covering various topics in linear programming (LP), including model formulation, optimization techniques, dual equations, transportation models, and inventory management. It includes multiple exercises requiring the application of LP concepts, such as maximizing profit, minimizing costs, and determining optimal solutions using methods like the simplex and Hungarian methods. Additionally, it addresses practical scenarios involving production constraints, transportation logistics, and inventory policies.

Uploaded by

malak.khaddam
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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BMIS355: Quantitative Methods of Business Decisions

Exercise Booklet

I. Chapter 2:

1. Consider the following LP model:

▪ 𝑀𝑎𝑥𝑖𝑚𝑖𝑧𝑒 𝑧 = 3𝑥1 + 5𝑥2


▪ 𝑠𝑢𝑏𝑗𝑒𝑐𝑡 𝑡𝑜 2𝑥1 + 𝑥2 ≤ 7
▪ 𝑥1 + 4𝑥2 ≤ 12
▪ 𝑥𝑖 ≥ 0

• Determine the best feasible solution among the following (feasible & infeasible)
solutions of the above LP problem:
a. 𝑥1 = 1; 𝑥2 = 2
b. 𝑥1 = 2; 𝑥2 = 1
c. 𝑥1 = 4; 𝑥2 = 2
16 17
d. 𝑥1 = 7 ; 𝑥2 = 7

2. TOYCO uses three operations to assemble three types of toys—trains, trucks, and
cars. The daily available times for the three operations are 340, 640, and 240 mins,
respectively. The revenues per unit of toy train, truck, and car are $4, $3, and $6,
respectively. The assembly times per train are as follows:

Train Truck Car


Operation 1 (min) 2 4 2
Operation 2 (min) 1 0 3
Operation 3 (min) 2 3 0

The production department states the following conditions:


• C4: The production of cars must not exceed 750 units.
• C5: the total production of trains & trucks should be at most 500 units.

a. Define the decision variables.


b. Define the objective function.
c. Write the constraints.
d. Write the variable condition.
3. Consider the following LP model:

Maximize
𝑧 = 4𝑥1 + 6𝑥2
Subject to
2𝑥1 + 𝑥2 ≤ 8
3𝑥1 + 5𝑥2 ≤ 15
4𝑥1 + 3𝑥2 ≤ 14
𝑥1 , 𝑥2 ≥ 0

a. Plot the constraint lines.


b. Shade the constraint lines.
c. Plot the objective function line z.
d. Determine the optimal solution. (Values of 𝑥1 , 𝑥2 , & 𝑧)
e. Reverse the signs of constraints 2 & 3, then:
i. Determine the new feasible area.
ii. Determine the new optimal solution. (New values of x1 , x2 , & z)

II. Chapter 3:

4. Standardize the following LP models:


a. Maximize z = 11x1 + 16x2 + 15x3
• Subject to x1 + 2x2 + 3x3 ≤ 12000
• 2x1 + 2x2 + 3x3 ≤ 4600
• x1 + x2 + 2x3 ≤ 2400
• xi ≥ 0

b. Minimize 𝑧 = 600𝑥1 + 900𝑥2


• Subject to 40𝑥1 + 60𝑥2 ≥ 480
• 30𝑥1 + 15𝑥2 ≥ 180
• 150𝑥1 + 50𝑥2 ≥ 750
• 𝑥𝑖 ≥ 0
5. Using the simplex method, find the optimal solution of the following LP Model:
▪ Maximize z = 11x1 + 16x2 + 15x3
▪ Subject to x1 + 2x2 + 3x3 ≤ 12000
▪ 2x1 + 2x2 + 3x3 ≤ 4600
▪ x1 + x2 + 2x3 ≤ 2400
▪ xi ≥ 0

III. Chapter 4:

6. Compute the dual equation of the following LP Models:

a. Minimize 𝑧 = 12𝑥1 + 8𝑥2


o Subject to 3𝑥1 + 4𝑥2 ≥ 6
o 2𝑥1 + 4𝑥2 ≥ 10
o 𝑥𝑖 ≥ 0

b. Minimize 𝑧 = 9𝑥1 + 6𝑥2


Subject to 2𝑥1 + 5𝑥2 ≥ 10
3𝑥1 + 9𝑥2 ≥ 27
𝑥𝑖 ≥ 0
IV. Chapter 5:

7. General Paint has five plants P1, P2, P3, P4 & P5 and five distribution centers in D1,
D2, D3, D4, D5. The capacities of the five plants are 75, 175, 32, 18, & 10,
respectively. The demands at the five distribution centers for the same period are 25,
15, 145, 105, & 150, respectively.

The following table represents the distance in Kilometers between the plants and the
distribution centers:

D1 D2 D3 D4 D5 Supply
P1 112 110 45 32 57 75
P2 70 13 36 17 22 175
P3 61 24 47 109 11 32
P4 83 44 27 101 12 18
P5 92 107 53 29 31 10
Demand 25 15 145 105 150

The truck company will charge General Paint $2 per kilometer.

a. Balance the above transportation model.


b. Compute 𝑪𝒊𝒋 .
c. Determine the objective function equation.
d. Write the supply constraints.
e. Write the demand constraints.

8. The following table summarizes the cost matrix of Logistics Co. transportation
model:

Jbeil Zahle Naqoura Jezzine Supply


Beirut $5 $12 $19 $20 12
Tripoli $9 $6 $15 $16 13
Saida $3 $9 $15 $21 25
Nabatieh $2 $10 $13 $12 17
Akkar $12 $15 $10 $10 13
Demand 20 20 15 25

a. Compute the starting feasible solution using the Northwest Method.


b. Determine the 1st entering variable.
c. Determine the 1st leaving variable.
d. Compute the new table.
9. John’s five brothers want to earn some money for personal expenses. He has chosen
five chores for his brothers: filling out orders, wrapping packages, delivering
packages, completing financial transactions, and handling warehouse counting.

The following table summarizes the cost grid:

Filling orders Wrapping Delivering Financial Warehouse


transactions counting
Imad $55 $81 $56 $47 $36
Moustapha $72 $98 $22 $83 $23
Adam $70 $27 $72 $60 $80
Wissam $15 $71 $71 $86 $78
Tom $42 $2 $10 $16 $79

Using the Hungarian method:


o Compute the 1st iteration.
o Compute the 2nd iteration.
o Determine the final answer.

V. Chapter 13:

10. ABC uses EOQ logic to determine the order quantity for its various components and
in planning its orders. The annual consumption is 80,000 units; cost to place one
order is $1,200; cost per unit is $50 & carrying cost is 6% of the unit cost.

11. An item is consumed at the rate of 30 items per day. The holding cost per unit per day
is $.05, and the setup cost is $100. Suppose that no shortage is allowed. The lead time
is 21 days. Determine the optimal inventory policy.

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