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# PROBLEM FORMULATION:

## 1. A trust fund is planning to invest up to \$6000 in two types of bonds.:

A and B. Bond A is safer than bond B and carries a dividend of 8%
while bond B carries a dividend of 10%. Suppose that the bond’s rule
state that no more than \$4000 may be invested in bond B, while at
least \$1500 must be invested in bond A. The amount invested in bond
B cannot exceed one half the amount invested in bond A. How much
should be invested in each type of bond to maximize the fund’s
return?

## 2. A bank has two types of branches. A satellite branch employs 3

people, requires P2,500,000 to construct and open, and generates an
average daily revenue of P400,000. A full-service branch employs 6
people, requires P5,500,000 to construct and open, and generates an
average daily revenue of P7,000,000. The bank has up to P80,000,000
available to open new branches, and has decided to limit the new
branches to a maximum of 25 and to hire at most 120 employees. How
many branches of each type should the bank open in order to
maximize the average daily revenue?

## 3. The total advertising budget for a firm is\$200,000. The following

table gives the costs per ad package for each medium and the number
of exposures per ad package (with all numbers in thousands).
Medium Medium Medium
1 2 3
Cost/package 10 4 5
Exposure/package 3100 2000 2400
If the maximum number of medium 1, medium 2, and medium 3
packages that can be purchased are 18, 10, and 12, respectively, how
many of each ad package should be purchased to maximize the

## 4. A woman has a building with 26 one-bedroom units, 40 2-bedroom

units, and 60 3-bedroom units. She has set the rent at P5000 per
month for the one-bedroom units, P8000 for the 2-bedroom units, and
P12000 for the 3-bedroom units. She must rent to one student per
bedroom, and zoning laws limit her to at most 250 students in this
building. There are enough students available to rent all the units. How
many of each type of unit should she rent to maximize her revenue?

## 5. Three water purification facilities can handle at most 10 million

gallons in a certain time period. Plant 1 leaves 20% of certain
impurities, and costs P20,000 per million gallons. Plant 2 leaves 15%
of these impurities and costs P30,000 per million gallons. Plant 3
leaves 10% impurities and costs P40,000 per million gallons. The
desired level of impurities in the water from all three plants is at most
15%. If Plant 1 and Plant 3 combined must handle at least 6 million
gallons, find the number of gallons each plant should handle so as to
achieve the desired level of purity at minimum cost.

## 6. A marketing research group conducting a telephone survey must

contact at least 150 wives and 120 husbands. It costs P100 to make a
daytime call and (because of higher labor costs) P150 to make an
evening call. On average, daytime calls reach wives 30% of the time,
husbands 10% of the time, and neither of these 60% of the time,
whereas evening calls reach wives 30% of the time, husbands 30% of
the time, and neither of these 40% of the time. Staffing considerations
mean that daytime calls must be less than or equal to half of the total
calls made. How many should be interviewed at each period to
minimize the cost of completing the survey.

## 7. Conglomo Corporation is considering investing in their smaller

companies, and it can purchase any fraction of each company. Each
investment by Conglomo requires a partial payment now and a final
payment one year from now. For each investment, the table below
summarizes the amount of each payment (in millions of dollars) and
the projected 5-year profit (also in millions of dollars).
Compan Compan Compan Compan Company
y1 y2 y3 y4 5
Paid now 13.2 63.6 6 6 34.8
Paid in 1 3.6 7.2 6 1.2 40.8
year
Projected 15.6 19.2 19.2 16.8 46.8
profit
This table may be interpreted as follows: if Conglomo purchases one-
fifth of Company 4, then it pays
1/5(6)=\$1.2 million now and 1/5(1.2)=\$0.24 million = \$240,000 after 1
year, and the one-fifth share has a projected 5-year profit of 1/5(16.8) =
\$3.36 million. Conglomo has available \$48 million for investment now
and \$24 million for investment 1 year from now. What fraction of each
smaller company should Conglomo purchase in order to maximize the
projected 5-year profit?

8. A farm cooperative has two farms, one at Spring Run and one at
Willow Bend, where it grows corn and soybeans. Differences between
the farms affect the associated costs and yields of each crop, as
shown in the table.
Corn Soybeans
Yield Yield
(bu/acre) Cost/acre (bu/acre) Cost/acre
Spring Run 450 \$110 360 \$99
Willow Bend 585 \$132 315 \$88
Each farm has 100 acres available to plant, and the total desired
yields are at least 46,800 bushels of corn and at least 42,300 bushels
of soybeans. How many acres of each crop should be planted at each
farm in order to achieve the desired crop yields at minimum cost?