Solution 1:

Profit function: 8x1 + 6x2 - 1 1/2 x3 - 3x4

Subject to: 0.9x1 + 0.8x2 - 0.4x3 - 0.6x4 = 0 Material balance on wax

x3 + x4 <8 Receiving facility

x2 <6 Packaging facililty

x1 <5 Packaging facility

where the coefficients of the profit function are in cents per pound.

Adding slack variables and multiplying the first constraint equation by 10 gives:

8x1 + 6x2 - 1 1/2 x3 - 3x4 =P

9x1 + 8x2 - 4x3 - 6x4 =0

x3 + x4 + x5 =8

x2 + x6 =6

x1 + x7 = 5

Select x2, x5, x6 and x7 to be the initial feasible basis. Perform the algebraic manipulations
to eliminate x2 from the objective function and the third constraint equation to give:

5/4 x1 + 3/2 x3 + 3/2 x4 =P P=0

9x1 + 8x2 - 4x3 - 6x4 =0 x2 = 0

x3 + x4 + x5 =8 x5 = 8

- 9/8 x1 + 1/2 x3 + 3/4 x4 + x6 =6 x6 = 6

x1 + x7 = 5 x7 = 5

The initial feasible basis is x2 = 0, x5 = 8, x6 = 6, x7 = 5, which is degenerate but can be

used. x3 enters the basis, x5 leaves the basis.

5/4 x1 - 3/2 x5 = P - 12 P = 12

9x1 + 8x2 - 2x4 + 4x5 = 32 x2 = 4

 x3 + x4 + x5 =8 x3 = 8

-9/8 x1 + 1/4x4 - 1/2 x5 + x6 =2 x6 = 2

x1 + x7 = 5 x7 = 5

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x1 enters the basis, x2 leaves the basis

- 10/9 x2 + 5/18 x4 - 37/18 x5 = P-16 4/9 P =16 4/9

9x1 + 8x2 - 2x4 + 4x5 = 32 x1= 3 5/9

x3 + x4 + x5 =8 x3 = 8

x2 + x6 =6 x6 = 6

- 8/9 x2 + 2/9 x4 - 4/9 x5 + x7 = 1 4/9 x7 = 1 4/9

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x4 enters the basis, x7 leaves the basis.

- 3/2 x5 - 5/4 x7 = P - 18¼ P = 18¼

9x1 + 9x7 = 45 x1 = 5

4x2 + x3 + 3x5 - 9/2 x7 = 1½ x3 = 1½

x2 + x6 =6 x6 = 6

- 4x2 + x4 - 2x5 + 9/2 x7 = 6½ x4 = 6½

All coefficients of variables in the objective function are negative. The optimal solution is
x1 = 500 lb/hr, x2 = 0, x3 = 150 lb/hr, x4 = 650 lb/hr, x5 = 0, and x6 = 600 lb/hr with P =
$18.25.