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Julia is a senior at Tech, and she’s investigating different ways to finance her final

year at school. She is considering leasing a food booth outside the Tech stadium at
home football games. Tech sells out every home game, and Julia knows, from
attending the games herself, that everyone eats a lot of food. She has to pay $1,000
per game for a booth, and the booths are not very large. Vendors can sell either
food or drinks on Tech property, but not both. Only the Tech athletic department
concession stands can sell both inside the stadium. She thinks slices of cheese pizza,
hot dogs, and barbecue sandwiches are the most popular food items among fans and
so these are the items she would sell.

Most food items are sold during the hour before the game starts and during half
time; thus it will not be possible for Julia to prepare the food while she is selling it.
She must prepare the food ahead of time and then store it in a warming oven. For
$600 she can lease a warming oven for the six-game home season. The oven has 16
shelves, and each shelf is 3 feet by 4 feet. She plans to fill the oven with the three
food items before the game and then again before half time.

Julia has negotiated with a local pizza delivery company to deliver 14-inch cheese
pizzas twice each game – 2 hours before the game and right after the opening
kickoff. Each pizza will cost her $4.50 and will include 6 slices. She estimates it will
cost her $0.50 for each hot dog and $1.00 for each barbecue sandwich if she makes
the barbecue herself the night before. She measured a hot dog and found it takes up
about 16 in2 of space, whereas a barbecue sandwich takes up about 25 in2. She plans
to sell a piece of pizza for $1.50 and a hot dog for $1.60 each and a barbecue
sandwich for $2.25. She has $1,500 in cash available to purchase and prepare the
food items for the first home game; for the remaining five games she will purchase
her ingredients with money she has made from the previous game.

Julia has talked to some students and vendors who have sold food at previous
football games at Tech as well as at other universities. From this she has discovered
that she can expect to sell at least as many slices of pizza as hot dogs and barbecue
sandwiches combined. She also anticipates that she will probably sell at least twice
as many hot dogs as barbecue sandwiches. She believes that she will sell everything
she can stock and develop a customer base for the season if she follows these general
guidelines for demand.

If Julia clears at least $1,000 in profit for each game after paying all her expenses,
she believes it will be worth leasing the booth.

A. Formulate a linear programming model for Julia that will help you to advise her
if she should lease the booth. Formulate the model for the first home game. Explain
how you derived the profit function and constraints and show any calculations that
allow you to arrive at those equations.
Let, X1 =No of pizza slices,
X2 =No of hot dogs,
X3 = No of barbeque sandwiches
 Objective function co-efficient:
The objective is to maximize total profit. Profit is calculated for each variable by
subtracting cost from the selling price.
For Pizza slice, Cost/slice=$4.5/6=$0.75
X1 X2 X3
SP $1.50 $1.60 $2.25
-Cost 0.75 $0.50 $1.00
Profit $0.75 $1.10 $1.25

Maximize Total profit Z = $0.75X1 + 1.10X2 +1.25X3

 Constraints:

1. Budget constraint:
0.75X1+0.50X2+1.00X3<=$1500

2. Space constraint:
 Total space available=3*4*16=192 sq feet =192*12*12=27,648 in- square
The oven will be refilled during half time.
Thus, the total space available=2*27,648= 55,296 in-square
 Space required for a pizza=14*14=196 in-square
Space required for a slice of pizza=196/6=32.667in-square approximately.
Thus, space constraint can be written as:
33X1 + 16X2 +25X3 <= 55,296 (In-square Of Oven Space)

3. at least as many slices of pizza as hot dogs and barbeque sandwiches combined
X1>=X2 + X3 (at least as many slices of pizza as hot dogs and barbeque sandwiches
combined)

4. at least twice as many hot dogs as barbeque sandwiches


X2/X3>= 2.0 (at least twice as many hot dogs as barbeque sandwiches)
This constraint can be rewritten as:
X2-2X3>=0
X1, X2, X3 >= 0

Model:
Maximize Total profit Z = $0.75X1 + 1.10X2 +1.25X3
Subject to:
0.75X1+0.50X2+1.00X3<=$1500 (Budget)
32.67X1 + 16X2 +25X3 <= 55,296 (In-square Of Oven Space)
X1-X2 - X3>=0 (at least as many slices of pizza as hot dogs and barbeque sandwiches
combined)
X2-2X3>=0 (at least twice as many hot dogs as barbeque sandwiches)
X1, X2, X3 >= 0 (Non negativity constraint)

B. Solve the linear programming model using a computer for Julia that will help
you advise her if she should lease the booth. In this solution, determine the number
of pizza slices, hot dogs and barbecue sandwiches she should sell at each game. Also
determine the revenues, cost and profit; and do an analysis of how much money she
actually will make each game given the expenses of each game.

Do an analysis of the profit solution and what impact it has on Julia’s ability to have
sufficient funds for the next home game to purchase and prepare the food. What
would you recommend to Julia?
Following table shows the Excel solver solution for the model:
Target Cell (Max)
Original
Cell Name Value Final Value
$
$E$6 2,102.01 $ 2,102.01

Adjustable Cells
Original
Cell Name Value Final Value
$B$6 X1 1136.219178 1136.219178
$C$6 X2 1136.219178 1136.219178
$D$6 X3 0 0

Constraints
Cell Name Cell Value Formula Status Slack
$E$1
0 No of Pizza slices constraint 0.00 $E$10>=$G$10 Binding 0.00
$E$1 Not
1 No of hotdogs and barbeque sandwiches 1136.22 $E$11>=$G$11 Binding 1136.22
Not
$E$8 Budget 1420.27 $E$8<=$G$8 Binding 79.7260274
$E$9 Oven space 55296.00 $E$9<=$G$9 Binding 0

Optimal solution:
X1=1136.22, X2=1136.22, X3=0 and Z=$2102

Thus, Julia should stock 1136.22 pizza slices, 1136.22 hot dogs and 0 barbeque
sandwiches with total profit of $2102.
Lease cost for booth=$1000
Lease cost of oven/game=$100.
After considering the expenses of $1100, It can be seen that at the end of first game, Julia
would make profit of $1002 which is slightly more than what she needs (i.e. $1000).
Thus, it would be worth to lease a booth for the game season.

According to the model, the available cash of $1500 is used to buy and the objective
function represents net profit. Therefore, Julia would not have to use any of her profit
money to buy ingredients for the next game. She would have the $1500 cash for buying
ingredients for the next game.

Looking at this analysis Julia should go ahead and lease the booth for the game season.

C. If Julia were to borrow some money from a friend before the first game to
purchase more ingredients, she feels she can increase her profits. What
amount, if any, would you recommend to Julia to borrow?
Following table shows the sensitivity report from excel solver:

Adjustable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$B$6 X1 1136.22 0 0.75 1.496 1.039
$C$6 X2 1136.22 0 1.1 1E+30 0.162
$D$6 X3 0 -0.192 1.25 0.192 1E+30

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$E$1
0 No of Pizza slices constraint 0.00 -0.49 0 1692.73 895.38
$E$1 No of hotdogs and barbeque
1 sandwiches 1136.22 0.00 0 1136.22 1E+30
$E$8 Budget 1420.27 0.00 1500 1E+30 79.73
$E$9 Oven space 55296.00 0.04 55296 3104 55296

It can be seen that the shadow price for Budget constraint=0 as the available money is not
utilized completely.(slack=79.73). Thus, borrowing more money from a friend would not
add to Julia’s profits. Therefore, she should not borrow any money from her friend.

D. Food prices have been rising lately. Assume purchase costs for the food is now
$6.00 for each pizza, $0.75 for each hot dog, and $1.25 for each barbecue sandwich.
Repeat the analysis of Part B. What would you recommend to Julia to do at this
point?
Following table shows the answer report with modified cost values for each of the food
items.

Target Cell (Max)


Original
Cell Name Value Final Value
$E$6 $ - $ 1,157.14

Adjustable Cells
Original
Cell Name Value Final Value
$B$6 X1 0 857.1428571
$C$6 X2 0 857.1428571
$D$6 X3 0 0

Constraints
Cell Name Cell Value Formula Status Slack
$E$1
0 No of Pizza slices constraint 0.00 $E$10>=$G$10 Binding 0.00
$E$1 No of hotdogs and Not
1 barbeque sandwiches 857.14 $E$11>=$G$11 Binding 857.14
$E$8 Budget 1500.00 $E$8<=$G$8 Binding 0
Not
$E$9 Oven space 41714.29 $E$9<=$G$9 Binding 13581.71429
Optimal solution:
X1=857.14, X2=857.14, X3=0 and Z=$1157.14

Thus, Julia should stock 857.14 pizza slices, 857.14 hot dogs and 0 barbeque sandwiches
with total profit of $1127.14.
Lease cost for booth=$1000
Lease cost of oven/game=$100.
After considering the expenses of $1100, It can be seen that at the end of first game, Julia
would make profit of $57.14 which is nowhere near her requirement of profit of at least
$1000 at the end of the game. Thus, Julia should not lease the booth.

E. Julia seems to be basing her analysis on the assumptions that everything will go
as she plans. What are some of the uncertain factors in the model that could go
wrong and adversely affect Julia’s analysis? Given these uncertainties and the
results in (B), (C), and (D), what do you recommend that Julia do? Take into
consideration her profit margin for each game.

A major uncertainty in a game could be weather. The fan’s preferences of food may
change depending on the weather condition.
Also, if the weather is rainy during a game or games, the crowd that turns out at the
games may not be as large as expected when making assumptions for the model. Thus,
the sales may not be as good as expected.

It can be seen from the results in (B),(C) and (D) that Julia’s profits in first case are just
above her target of $1000 while in (D), the profits are nowhere near her expectation. And
these profits can be expected only under the assumptions made. If any of the uncertainties
mentioned above are to be considered, Julia doesn’t have much slack in profit to adjust
against these uncertainties.

Thus, considering all these factors, it seems unlikely that Julia would achieve $1000
profit per game. Thus, Julia should not lease the booth.

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