Chapter 3 - Modeling & Solving LP Problems In A Spreadsheet : S-1

Chapter 3
Modeling & Solving LP Problems In A Spreadsheet
1.

In general, it does not matter what is placed in a variable (changing) cell. Ultimately, Solver will
determine the optimal values for these cells. If the model builder places formulas in changing cells,
Solver will replace the formulas with numeric constants representing the optimal values of the decision
variables. An exception to this general principle is found in Chapter 8 where, when solving nonlinear
programming problems, the values placed in the changing cells represent the initial starting point for the
optimizer.

2.

Communication - once the user understands the first formula in a range of copied cells, he or she should
understand all the formulas in the range.
Reliability - assuming the first formula is entered correctly, all the copied formulas should be correct also.
Auditability - once the user understands the first formula in a range of copied cells, he or she should
understand (and audit) all the formulas in the range
Maintainability - if a change needs to be made, it can be made in one formula and then copied as
necessary.

3.

TV ads = 10, Magazine ads =25, Maximum profit = $775,000

See file: Prb3_3.xls

4.

Ore 1 = 28, Ore 2 = 8, Minimum cost = $3,480

See file: Prb3_4.xls

5.

Beef = 50%, Pork = 50%, Minimum cost per pound = $0.75

See file: Prb3_5.xls

6.

Razors = 240, Zoomers = 420, Maximum profit = $33,600

See file: Prb3_6.xls

7.

Executive desks = 100, Senator desks = 500, Maximum profit = $59,300

See file: Prb3_7.xls

8.

Acres planted in watermelons = 60, Acres planted in cantaloupes = 40, Maximum profit = $26,740
See file: Prb3_8.xls

9. Doors = 20, Windows = 40 , Maximum profit = $26,000

See file: Prb3_9.xls
10. Desktops = 46.15, Laptops = 69.23, Maximum profit = $90,000 (alternate optimal solutions exist)
See file: Prb3_10.xls
11. TV = 20, Managize = 2 , Minimal cost = $3.5 million
See file: Prb3_11.xls
12. a.

X1 = Number of country tables to produce

X2 = Number of contemporary tables to produce
MAX

350 X1 + 450 X2

ST

1.5 X1 + 2 X2 1,000
3 X1 + 4.5 X2 2,000
2.5 X1 + 1.5 X2 1,500
X1/ ( X1 +X2) 0.20
(implement as X1 0.2* ( X1 +X2) )

Chapter 3 - Modeling & Solving LP Problems In A Spreadsheet : S-2

X2/ ( X1 +X2) 0.30

Xi 0

(implement as X2 0.3* ( X1 +X2) )

Many students attempt to implement the ratio constraints in their original form; resulting in a
division by zero error at the null solution and a message from Solver that the model is not linear. The
algebraic equivalence of the alternate form of these constraints (given parenthetically above) should
be noted.
b.
c.

See file: Prb3_12.xls

X1 = 405.80, X2 = 173.91, Maximum revenue = $220,290

13. a.

X1,j = Number of dehumidifiers made in Atlanta in month j

X2,j = Number of dehumidifiers made in Phoenix in month j
Bj = Beginning inventory in month j
MIN

400 (X11 + X12 + X13 ) +360 (X21 + X22 + X23 ) + 30 ( B1 + B2 + B3 )

ST

B1 + X11 + X21 300 0

B2 + X12 + X22 400 0
B3 + X13 + X23 500 0
Xij 300
Xij 0

Where

B1 = 0
B2 = B1 + X11 + X21 300
B3 = B2 + X12 + X22 400
b.
c.
14. a.

See file: Prb3_13.xls

X11 = 0, X12 = 100, X13 = 200, X21 = 300, X22 = 300, X23 = 300, Maximum revenue = $444,000
X1 = pounds of Whole product to produce
X2 = pounds of Cluster product to produce
X3 = pounds of Crunch product to produce
X4 = pounds of Roasted product to produce
MAX
ST

b.
c.
15. a.

1.85 X1 + 1.4 X2 + 1.04 X3 + 1.40 X4

1 X1 + 1 X2 + 1 X3 + 1 X4 < 3600
2 X1 + 1.5 X2 + 1 X3 + 1.75 X4 < 3600
1 X1 + 0.7 X2 + 0.2 X3 + 0.00 X4 < 3600
2.5 X1 + 1.6 X2 + 1.25 X3 + 1 X4 < 3600
0.6 X1 + 0.4 X2 + 0.2 X3 + 1 X4 < 1100
0.4 X1 + 0.6 X2 + 0.8 X3 + 0 X4 < 800
1,000 < X1 < 99,999
400 < X2 < 500
0 < X3 < 150
0 < X4 < 200

See file: Prb3_14.xls

X1= 1000, X2= 500, X3= 80, X4= 200, Maximum profit = $2,913.2
N1 = number of Newspaper ads to run at $1,000 each
N2 = number of Newspaper ads to run at $900 each
N3 = number of Newspaper ads to run at $800 each

Chapter 3 - Modeling & Solving LP Problems In A Spreadsheet : S-3

T1 = number of Television ads to run at $12,000 each

T2 = number of Television ads to run at $10,000 each
T3 = number of Television ads to run at $8,000 each
MAX
ST

b.
c.
d.
16. a.

b.
c.
d.
17. a.

See file: Prb3_12.xls

N1 = 10, N2 = 10, N3 = 0, T1 = 5 , T2 = 5 , T3 = 2
New Customers = 113,500
N3 is used before N2.
Xij = Square feet of space rented in month i (i=1, 2, 3, 4, 5) through month j (j=i, i+1, , 5)
MIN 55X11 + 95X12 + 130X13 + 155X14 + 185X15 + 55X22 + 95X23 + 130X24 + 155X25 + 55X33 + 95X34
+ 130X35 + 55X44 + 95X45 + 55X55
ST X11 + X12 + X13 + X14 + X15 > 20000
X12 + X13 + X14 + X15 + X22 + X23 + X24 + X25> 30000
X13 + X14 + X15 + X23 + X24 + X25 + X33 + X34 + X35 > 40000
X14 + X15 + X24 + X25 + X34 + X35 + X44 + X45 > 35000
X15 + X25 + X35 + X45 + X55 > 50000
Xij > 0
See file: Prb3_16.xls
X15 = 20000, X25 = 10000, X33 = 5000, X35 = 5000, X55 = 15000
Total leasing cost = $7 million
$9.625 million
X1 = Amount invested in Bonds
X2 = Amount invested in Mortgages
X3 = Amount invested in Car loans
X4 = Amount invested in Personal Loans
MAX
ST

b.
c.
18. a.

900 N1 + 700 N2 + 400 N3 + 10,000 T1 + 7,500 T2 + 5,000 T3

1,000 N1 + 900 N2 + 800 N3 + 12,000 T1 + 10,000 T2 + 8,000 T3 145,000
Ni 10
Ti 5
Ti, Ni > 0

10 X1 + 8.5 X2 + 9.5 X3 + 12.5 X4

X1 + X2 + X3 + X4 = 650,000
X4 .25*(650000)
X4 X2
X4 X1
X1 , X2 , X3 , X4 0

See file: Prb3_17.xls

X1 = 325,000, X2 = 162,500, X3 = 0, X4 = 162,500, Maximum return = 10.25%
X1 = number of HyperLink cards to produce
X2 = number of FastLink cards to produce
X3 = number of SpeedLink cards to produce
X4 = number of MicroLink cards to produce
X5 = number of EtherLink cards to produce
MAX
ST

53 X1 + 48 X2 + 33 X3 + 32 X4 + 38 X5
20 X1 + 15 X2 + 10 X3 + 8 X4 + 5 X5 80,000
28 X1 + 24 X2 + 18 X3 + 12 X4 + 16 X5 100,000
8 X1 + 8 X2 + 4 X3 + 4 X4 + 6 X5 30,000
0.75 X1 + 0.6 X2 + 0.5 X3 + 0.65 X4 + 1 X5 5,000

Chapter 3 - Modeling & Solving LP Problems In A Spreadsheet : S-4

2 X1 - 1 X2 0
Xi 500
b.
c.
d.
19. a.

See file: Prb3_18.xls

X1 = 500, X2 = 1000, X3 = 1500, X4 = 2250, X5 = 500, Total Profit = $215,000
No. The assembly constraint is nonbinding.
A = amount to invest in bond A
B = amount to invest in bond B
C = amount to invest in bond C
D = amount to invest in bond D
E = amount to invest in bond E
MAX
ST

b.
c.
20. a.

0.095A + 0.08B + 0.09C + 0.09D + 0.09E

A + B + C + D + E = 100,000
B + E 50,000
A + D + E 50,000
A + B + D 30,000
0.095A + 0.08B + 0.09D 0.4* (0.095A + 0.08B + 0.09C + 0.09D + 0.09E)
A, B, C, D, E 0

See file Prb3_19.xls

A=20,339, B=20,339, C=29,661, D=0 , E=29,661
Maximum return = $8,898 (or 8.898%)
M1= number of electric trimmers to make
M2= number of gas trimmers to make
B1= number of electric trimmers to buy
B2= number of gas trimmers to buy
MIN 55M1 + 85 M2 + 67 B1 + 95 B2
ST M1 + B1 = 30,000
M2 + B2 = 15,000
0.20M1 + 0.40M2 10,000
0.30M1 + 0.50M2 15,000
0.10M1 + 0.10M2 5,000
Mi, Bi 0

b.
c.
21. a.

See file: Prb3_20.xls

M1=30,000, M2=10,000, B1=0, B2=5,000
Minimum cost = $2,975,000
Xij = 1 if component i is assigned to company j; 0, otherwise
MIN

ST

185 X1A +225 X1B +193 X1C +207 X1D

+200 X2A +190 X2B +175 X2C +225 X2D
+330 X3A +320 X3B +315 X3C +300 X3D
+375 X4A +389 X4B +425 X4C +445 X4D
X1A + X1B + X1C + X1D = 1
X2A + X2B + X2C + X2D = 1
X3A + X3B + X3C + X3D = 1

Chapter 3 - Modeling & Solving LP Problems In A Spreadsheet : S-5

X4A + X4B + X4C + X4D = 1

X1A + X2A + X3A + X4A = 1
X1B + X2B + X3B + X4B = 1
X1C + X2C + X3C + X4C = 1
X1D + X2D + X3D + X4D = 1
b.
c.
22. a.

See file: Prb3_21.xls

X1A = X2C = X3D = X4B = 1, Minimum cost = $1,049 (in $1,000s)
Pi = proportion of compound i to include in the mix
MIN
ST

b.
c.
23. a.

b.
c.

24. a.

5.00 P1 + 5.25 P2 + 5.50 P3

0.20 P1 + 0.40 P2 + 0.10 P3 .20
0.60 P1 + 0.30 P2 + 0.40 P3 .30
0.20 P1 + 0.30 P2 + 0.50 P3 .30
0.20 P1 + 0.30 P2 + 0.50 P3 .45
P1 + P2 + P3 = 1.0
Pi 0

See file: Prb3_22.xls

P1=0.5714, P2=0.1429, P3=0.2857
Minimum cost per pound = $5.18
Bi = pounds of grade i fruit used in baskets
Ji = pounds of grade i fruit used in juice
MAX: $2.50 (B1 + B2 + B3 + B4 + B5 ) + $1.75 (J1 + J2 + J3 + J4 + J5 )
S.T.:
B1 + J1 90
B2 + J2 225
B3 + J3 300
B4 + J4 100
B5 + J5 75
1 B1 + 2 B2 + 3 B3 + 4 B4 + 5 B5 3.75 (B1 + B2 + B3 + B4 + B5 )
1 J1 + 2 J2 + 3 J3 + 4 J4 + 5 J5 2.50 (J1 + J2 + J3 + J4 + J5 )
Bi , Ji 0
See file: Prb3_23.xls
B1 = 0, B2 = 46.67, B3 =0, B4 = 100 B5 = 45.33,
J1 = 90, J2 = 178.33, J3 =300, J4 = 0 J5 = 29.67,
Profit = $1,526,500
XiR = barrels of input i used to produce regular
XiS = barrels of input i used to produce supreme
MAX: (21-17.25)X1R+(21-15.75)X2R+(21-17.75)X3R+(25-17.25)X1S+(25-15.75)X2S+(25-17.75)X3S
ST:
X1R + X1S 150
X2R + X2S 350
X3R + X3S 300
X1R + X2R + X3R = 300
X1S + X2S + X3S = 450
(100X1R + 87X2R + 110X3R)/300 90
(100X1S + 87X2S + 110X3S)/450 97

Chapter 3 - Modeling & Solving LP Problems In A Spreadsheet : S-6

Xij 0
b.
c.
25. a.

See file Prb3_24.xls

X1R=0, X2R=260.87, X3R=39.13, X1S=150, X2S=89.13, X3S=210.87 (alternate optimal exist)
Maximum Profit = $5,012.5 (in $1,000s)
X1 = number of workers starting at 12 am
X2 = number of workers starting at 4 am
X3 = number of workers starting at 8 am
X4 = number of workers starting at 12 pm
X5 = number of workers starting at 4 pm
X6 = number of workers starting at 8 pm
MIN
ST

b.
c.

X1+ X2 + X3+ X4 + X5+ X6

X6 + X1 90
X1 + X2 215
X2 + X3 250
X3 + X4 165
X4 + X5 300
X5 + X6 125
Xi 0

See file: Prb3_25.xls

X1=90, X2 =250, X3=0, X4 =175, X5=125, X6=0 (alternate optimal solutions exist)
Minimum number of employees = 640

Teaching Note: As an interesting extension to this problem, ask students to consider how to minimize
the maximum number of excess employees on any shift while holding the total number of employees used
at its optimal value of 640.
26. a.

Xij = number of units of specimen i assigned to machine j

MIN

ST

b.
c.
d.

3 X1A + 4 X2A + 4 X3A + 5 X4A + 3 X5A

+ 5 X1B + 3 X2B + 5 X3B + 4 X4B + 5 X5B
+ 2 X1C + 5 X2C + 3 X3C + 3 X4C + 4 X5C
3 X1A + 4 X2A + 4 X3A + 5 X4A + 3 X5A 480
5 X1B + 3 X2B + 5 X3B + 4 X4B + 5 X5B 480
2 X1C + 5 X2C + 3 X3C + 3 X4C + 4 X5C 480
X1A + X1B + X1C = 80
X2A + X2B + X2C = 75
X3A + X3B + X3C = 80
X4A + X4B + X4C = 120
X5A + X5B + X5C = 60
Xij 0

See file: Prb3_26.xls

X1C = 80, X2B = 75, X3A = 75, X3C = 5, X4B = 18.33, X4C = 101.67, X5A = 60
Minimum processing time = 1258.33 minutes. (If an integer solution is needed the LP solution can be
rounded to yield the optimal integer solution.)
Machine A & C are used all 480 minutes, machine B is used 298.33 minutes

Chapter 3 - Modeling & Solving LP Problems In A Spreadsheet : S-7

e.
27. a.

A solution exists where all machine are used for an equal amount of time (425.5 minutes each). This
increases the total time used to 1276.5 minutes.
Pi = proportion of coal i to include in the mix
MAX
ST

b.
c.
d.
28. a.

See file: Prb3_27.xls

P1=0.058, P2=0.5507, P3=0.3913
Maximum steam production = 32,174 pounds per ton
32,174 30 = 965,217 pounds of steam
X1 = number of CD players to produce
X2 = number of tape decks to produce
X3 = number of stereo tuners to produce
MAX
ST

b.
c.
29. a.

75 X1 + 50 X2 + 40 X3
3 X1 + 2 X2 + 1 X3 400,000
50,000 X1 150,000
50,000 X2 100,000
50,000 X3 90,000

See file: Prb3_28.xls

X1= 70,000, X2 = 50,000, X3 = 90,000
Maximum profit = $11,350,000
Xij = number of cars shipped from location i to location j
MIN
ST

b.
c.

24,000 P1 + 36,000 P2 + 28,000 P3

1,100 P1 + 3,500 P2 + 1,300 P3 2,500
1.7 P1 + 3.2 P2 + 2.4 P3 2.8
P1 + P2 + P3 = 1.0
Pi 0

54 X13 + 17 X14 + 23 X15 + 30 X16 + 24 X23 + 18 X24 + 19 X25 + 31 X26

X13 + X14 + X15 + X16 = 16
X23 + X24 + X25 + X26 = 18
5 X13 + X23 10
5 X14 + X24 10
5 X15 + X25 10
5 X16 + X26 10
Xij 0

See file: Prb3_29.xls

X23 = 9, X14 = 10, X15 = 1, X25 = 9, X16 = 5
Minimum transportation cost = $730

30. a. See file: Prb3_30.xls

b. Minimum cost = $3,011,360, optimal shipping plan (using all production capacity) is:
From\To
Macon

Tacoma
0

San Diego
0

Dallas
0

Denver
0

St. Louis
0

Tampa
12000

Baltimore
6000

Chapter 3 - Modeling & Solving LP Problems In A Spreadsheet : S-8

Louisville
Detroit
Phoenix

600
400
5800

0
0
14200

0
10800
0

0
12600
0

14400
0
0

0
0
0

0
1200
0

31. a. See file: Prb3_31.xls

c. Minimum cost = $44,067.67, recycling plan is:

Newspaper
Mixed Paper
White Office Paper
Cardboard
32. a.

Newsprint
588.24
0.00
0.00
0.00

Packaging
11.76
71.43
300.00
397.78

Print Stock
0.00
428.57
0.00
0.00

Xij = number of bottles produced at vineyard i sold to restaurant j

MAX 39X11 + 36X12 + 34X13 + 34X14 + 32X21 + 36X22 + 37X23 + 34X24
ST
X11 + X12 + X13 + X14 = 3,500
X21 + X22 + X23 + X24 = 3,100
X11 + X21 1800
X12 + X22 2300
X13 + X23 1250
X14 + X24 1750
Xij 0

b.
c.
33. a.

See file: Prb3_32.xls

X11 = 1,800, X12 = 1,700, X22 = 600, X23 = 1,250, X24 = 1,250, Maximum profit = $241,750
(Alternate optima exist.)
X1 = Cases of Extra Hot sauce to produce
X2 = Cases of Hot sauce to produce
X3 = Cases of Mild sauce to produce
A1 = Advertising dollars spent promoting Extra Hot sauce
A2 = Advertising dollars spent promoting Hot sauce
A3 = Advertising dollars spent promoting Mild sauce
MAX
ST

4 X1 + 4.5 X2 + 4.75 X3 - A1 - A2 - A3
X1 = 8,000 + 10 A1
X2 = 10,000 + 8 A2
X3 = 12,000 + 5 A3
A1 + A2 + A3 25,000
Ai 5,000

Note that the Xi can be computed directly from the Ai. Therefore, the Ai are the only decision
variables (changing cells) in the model. The Xi can be computed in the spreadsheet using the
conditions imposed by the first three constraints. Therefore, it is not necessary to indicate these as
constraints cells for Solver.
b.
c.

See file: Prb3_33.xls

X1 = 158,000, X2 = 50,000, X3 = 37,000, A1 = 15,000, A2 = A3 = 5000
Maximum profit = $1,007,750

Chapter 3 - Modeling & Solving LP Problems In A Spreadsheet : S-9

34. a.

b.
c.
35. a.

Pi = Number of units to produce in month i

Ii = Inventory held at the end of month i
MIN

49 X1 + 45 X2 + 46 X3 + 47 X4 - 1.5 (120 + 2I1 + 2I2 + 2I3 + I4 )/2

ST

I1 =120 + P1 - 420
I2 = I1+ P2 - 580
I3 = I2+ P3 - 310
I4 = I3+ P4 - 540
400 P1 500
400 P2 520
400 P3 450
400 P4 550
Ii 50

Note that the Ii can be computed directly from the Pi. Therefore, the Pi are the only decision variables
(changing cells) in the model. The I i can be computed in the spreadsheet using the conditions
imposed by the first four constraints. Therefore, it is not necessary to indicate these as constraints
cells for Solver. However, note that lower bounds of 50 must be indicated for these cells.
See file: Prb3_34.xls
X1 = 410, X2 = 520, X3 = 400, X4 = 450, I1 = 110, I2 = 50, I3 = 140, I4 = 50
Minimum cost = $83,617
Xij = tons of commodity i stored in hold j
MAX
ST

b.
c.

70(X11+X12+X13) + 50(X21+X22+X23) + 60(X31+X32+X33) + 80(X41+X42+X43)

X11 + X12 + X13 < 4800
X21 + X22 + X23 < 2500
X31 + X32 + X33 < 1200
X41 + X42 + X43 < 1700
X11 + X21 + X31 + X41 < 3000
X12 + X22 + X32 + X42 < 6000
X13 + X23 + X33 + X43 < 4000
40X11 + 25X21 + 60X31 + 55X41 < 145000
40X12 + 25X22 + 60X32 + 55X42 < 180000
40X13 + 25X23 + 60X33 + 55X43 < 155000
0.9(X13 + X23 + X33 + X43 ) < X11 + X21 + X31 + X41 < 1.1(X13 + X23 + X33 + X43)
0.4 Total < X12 + X22 + X32 + X42 < 0.6 Total
Xij > 0

See file: Prb3_35.xls

Profit = $669,000
Forward
Center
Rear

36. a.

1
2
3
X11=1287.5 X21=0
X31=0
X12=1580 X22=2500
X32=0
X13=1932.5 X23=0
X33=1200

4
X41=1700
X42=0
X43=0

Xij = Square feet (in 1000s) leased at beginning of month i for j months

Chapter 3 - Modeling & Solving LP Problems In A Spreadsheet : S-10

MIN

300 (X11 + X21 + X31 + X41 + X51) + 525 (X12 + X22 + X32 + X42 ) + 775 (X13 + X23 + X33 )
+ 850 (X14 + X24) + 975 X15

ST

X11 + X12 + X13 + X14 + X15 > 25

X21 + X22 + X23 + X24 + X12 + X13 + X14 + X15 > 10
X31 + X32 + X33 + X22 + X23 + X24 + X13 + X14 + X15 > 20
X41 + X42 + X32 + X33 + X23 + X24 + X14 + X15 > 10
X51 + X42 + X33 + X24 + X15 > 5
Xij > 0

b.
c.
37. a.

See file: Prb3_36.xls

X11 = 15, X14 = 5, X15 = 5, X31 = 10
Total cost = $16,625
Pi = Number of tons purchased in month i
Si = Number of tons sold in month i
Ii = Inventory held at the end of month i
MAX

ST

135 S1 + 110 S2 + 150 S3 + 175 S4 + 130 S5 + 145 S6

-135 P1 - 110 P2 - 150 P3 - 175 P4 - 130 P5 - 145 P6
- 10 ( 70 + 2I1 + 2I2 + 2I3 + 2I4 + 2I5 + 2I6)/2
I1 = 70 + P1 - S1
I2 = I1 + P2 - S2
I3 = I2 + P3 - S3
I4 = I3 + P4 - S4
I5 = I4 + P5 - S5
I6 = I5 + P6 - S6
I6 = 0
0 Ij 400
Pj 0
Sj 0

Note that the Ij can be computed directly from the Pj and Sj . Therefore, the Pj and Sj are the only
decision variables (changing cells) in the model. The I j can be computed in the spreadsheet using the
conditions imposed by the first six constraints. Therefore, it is not necessary to indicate these as
constraints cells for Solver. However, note that lower bounds of 0 and upper bounds of 400 apply to
these cells. Some students will want to know how much Earl paid for the 70 tons of soybeans in the
beginning inventory. This represents a sunk cost that is irrelevant for the problem at hand.
b.
c.

38. a.

See file: Prb3_37.xls

P1 = 0, P2 = 400, P3 = 0, P4 = 0, P5 = 400, P6 = 0
S1 = 70, S2 = 0, S3 = 0, S4 = 400, S5 = 0, S6 = 400
Maximum profit = $29,100
A = Amount to invest in investment A
B = Amount to invest in investment B
C = Amount to invest in investment C
D = Amount to invest in investment D
E = Amount to invest in investment E
S98 = Amount to invest in savings in 1998
S99 = Amount to invest in savings in 1999

Chapter 3 - Modeling & Solving LP Problems In A Spreadsheet : S-11

S00 = Amount to invest in savings in 2000

MAX
ST

b.
c.
39. a.

b.
c.
40. a.

b.
c.

41. a.
b.

1.25 B + 1.35 C + 1.13 D + 1.08 S00

A + C + E + S98 = 1,000,000
0.5 A + 1.08 S98 - B - S99 = 0
0.8 A + 1.27 E + 1.08 S99 - D - S00 = 0
0 A 500,000
0 B 500,000
0 C 500,000
0 D 500,000
0 E 500,000
50,000 S98 500,000
50,000 S99 500,000
50,000 S00 500,000

See file: Prb3_38.xls

A=500,000, B= 275,685, C=0, D=500,000, E=429,921, S98=70,079, S99=50,000, S00=500,000
Maximum amount of money at the beginning of 2001 = $1,449,606
MIN
ST

A12 + B13 + C14 + D18

1.06A12 - A23 = 0
1.06A23 + 1.14B13 - A34 - B35 = 0
1.06A34 + 1.18C14 - A45 - C47 = 0
1.06A45 + 1.14B35 - A56 - B57 = 0
1.06A56 - A67 = 12
1.06A67 + 1.14B57 + 1.18C47 - A78 - B79 = 14
1.06A78 + 1.65D18 - A89 = 16
1.06A89 + 1.14B79 = 18
Aij, Bij, Cij, Dij 0

See file Prb3_39.xls

A56 = $11,321, A89 = $16,981, B13 = $18,161, B35 = $20,703, B57 = $12,281, D18 = $19,989
Minimum investment = $38,149
Same as in problem 38 above with the following additional constraints:
-3A12 -1B13 + 2C14 + 4D18 0
-3A23 -1B13 + 2C14 + 4D18 0
-3A34 -1B35 + 2C14 + 4D18 0
-3A45 -1B35 + 2C47 + 4D18 0
-3A56 -1B57 + 2C47 + 4D18 0
-3A67 -1B57 + 2C47 + 4D18 0
-3A78 -1B79 + 4D18 0
-3A89 -1B79 0
See file Prb3_40.xls
A56 = $11,321, A78 = $4,945, A89 = $1,345, B13 = $31,306, B35 = $35,688, B57 = $29,364,
B79 = $14,531, D18 = $7,341
Minimum investment = $38,647
See file Prb3_41.xls
Borrow $220,000 for 5 months in month 1.
Borrow $275,000 for 4 months in month 2.
Borrow $49,505 for 1 months in month 3.
Borrow $270,270 for 2 months in month 3.
Borrow $5,225 for 3 months in month 3.
Total Finance Charge = $22,878.

Chapter 3 - Modeling & Solving LP Problems In A Spreadsheet : S-12

c.

42. a.

There is no feasible solution if the company is restricted to borrowing no more than $100,000 at each
level in the term / rate structure. Ask students to determine what the borrowing limit would need to
be increase to in order to obtain a feasible solution. The answer (of $101,257) can be obtained by: 1)
making the borrowing limit a changing cell, and 2) also making it the set cell and minimizing its
value.
Ti = Number of people in group i surveyed by telephone
Wi = Number of people in group i surveyed in person vai web-cam
MIN:
ST

18 T1 + 14T2 + 25T3 + 20T4 + 40W1 + 35W2 + 60W3 + 45W4

2000 < T1 + T2 + W1 + W2 < 4000
1000 < W1 + W2 + W3 + W4 < 4000
1000 < W1 + W2 + W3 + W4 < 4000
-4000 < T1 W1 < 0
0 < W2 + W4 + T2 + T4 < 1600
0 < 0.25W2 + 0.25W4 0.75T2 0.75T4 < 4000
400 < Ti , Wi < 2000

b.
c.

See file: Prb4_42.xls

T1 = 1000, T2 = 1200, T3 = 400, T4 = 400, W1 = 1000, W2 =W3=W4= 0 ;
Minimum cost = $92,800

43. See file: Prb3_43.xls

Take a six month loan for $48,000.
Borrow $27,200 against receivables in February and $105,000 in March.
Defer $3,000 in payments in March.
44. a.
b.

See file: Prb3_44.xls

Purchase 79.5337 units on bond 1, 82.8987 units of bond 2, and 35.023 units of bond 3 and invest
$52,482 in the savings account. Total investment = $246,769.

45. a.
b.

See file: Prb3_45.xls

Total Profit = $1,309,900
Thousand cubic feet
Day
Bought
Sold
1
200.00
0.00
2
0.00
170.00
3
0.00
180.00
4
160.00
0.00
5
200.00
0.00
6
0.00
180.00
7
0.00
180.00
8
0.00
0.00
9
180.00
0.00
10
0.00
180.00
The prices and inventory level should be updated and re-solved everyday with the decisions for
"Day 1" implemented each day.

c.

Teaching note: Some students may want to know how much money the company paid for the
150,000 cf of gas in storage. Because this represents a sunk cost, it is irrelevant for decision making
purposes.
46. a.
b.
c.

See file: Prb3_44.xls

Sheritown Inn, Merrylot, FairPrice Inn, and Western Hotels are efficient.
Target values:

Chapter 3 - Modeling & Solving LP Problems In A Spreadsheet : S-13

Satisfact.
88
47. a.
b.
c.

Value
86.1474

Price
64.8421

Conv.
1.38947

See file: Prb3_45.xls

Branches 1, 2, 6 & 8 are efficient.
Target values:
ROA
New Loans
Satisfaction
6.4000
928.9375
98.0000

Comfort
1.01895

Climate
0.18526

Labor Hrs
5.5692

Service
0.46316

Food
0.46316

Op. Costs
6.8260

Case 3-1: Putting the Link in the Supply Chain

a.
b.
c.
d.

See file: Case3_1.xls; Maximum profit = $1,304,544

The solution uses all the aluminum in Daytona and Memphis and all the wood in Tempe.
Maximum profit = $1,349,439
If 80% of the demand must be met the company could earn $1,329,986. This is $25,422 more than under
the original 90% scenario. Thus, after paying the $10,000 penalty the company would still be $15,422
ahead under the 80% scenario. However, the increased profit may or may not offset the potential good
will that may be lost if the customers are not happy having less of their desired order quantities met.

a.
b.

See file: Case3_2.xls

In millions:
Sell \ Buy
USD
EUR
GBP
HKD
JPY
USD
0.000
2.945
0.000
0.000
0.000
EUR
0.000
0.000
0.000
0.000
0.000
GBP
0.000
0.000
0.000
0.000
0.840
HKD
9.328
0.000
0.000
0.000
0.000
JPY
0.000
0.000
0.000
131.314
0.000
Transaction cost: $27,867
The transaction cost barely changes to $27,860.
This creates an unbounded solution or an arbitrage opportunity.

Case 3-2: Baldwin Enterprises

c.
d.
e.

Case 3-3: The Wolverine Retirement Fund

See file: Case3_3.xls
a. Buy 411 share of AC&C, 169 share of MicroHard (fractional solution rounded up), Total Cost = $495,892
b. Cost of stipulation (1): $506,590, Cost of stipulaiton (2): $500,736

Case 3-4: Saving the Manatees

a.
b.
c.
d.

See file: Case3_4.xls. Maximum impact rating = 23,523

Minimum Full-Page ads in the daily papers, minimum full-page Sunday ads, minimum evening TV spots,
maximum highway billboards, maximum 15 & 30 second radio ads, minimum full-page magazine ads,
maximum number of total daily paper ads, maximum Sunday paper ads, maximum magazine ads.
Not at all. These constraints are not binding.
Maximum impact rating = 29,289