Math462/562 One Variable Optimization-HW1 Due date: Mon.

September 23

Print and fill in the summary of your answers on the pages as indicated. You can use Matlab or other software
programming for your calculations. Attach your detailed work, handwritten and/or Matlab files and their
outputs, on the back of the summary.

Exersice Section 1.4: # 1 (a), 1(b), 1(d), # 4 (a), and # 9

1 An automobile manufacturer makes a profit of $1,500 on the sale of a certain model. It is estimated that
for every $100 of rebate, sales increase by 15%.
(a) What amount of rebate will maximize the profit?
i. Variables (with units)

ii. Assumptions with unit check

iii. Objective

iv. Formulate the model as a one-variable optimization problem.

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Math462/562 One Variable Optimization-HW1 Due date: Mon. September 23

v. Amount of rebate maximizing profit

vi. Discuss the shortcomings of your model (Are all assumptions realistic, etc.)

(b) Compute the sensitivity of your answer to the 15% assumption.

i. Sensitivity of the optimal rebate amount and its interpretation

ii. Sensitivity of the maximum profit and its interpretation

(d) Under what circumstances would a rebate offer cause a reduction in profit?

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Math462/562 One Variable Optimization-HW1 Due date: Mon. September 23

4 An oil spill has fouled 200 miles of Pacific shoreline. The oil company responsible has been given 14 days to
clean up the shoreline, after which a fine will be levied in the amount of $10,000/day. The local cleanup
crew can scrub five miles of beach per week at a cost of $500/day. Additional crews can be brought in at a
cost of $18,000 plus $800/day for each crew.

(a) How many additional crews should be brought in to minimize the total cost to the company? How
much will the cleanup cost?

Hints:

• You use the following letters for the variables.

n = number of additional crews
n0 = number of additional crews required to clean up the shore line in exactly 14 days
t = number of days to clean up the oil spill
C = total cost (measured in 1, 000’s of dollars to reduce the size of the numbers)
• You should find a formula for t in terms of n; denote this by t = t(n). With this formula, find the
value of n0 . Note that the company will pay a fine if n < n0 and avoid paying a fine if n ≥ n0 .
• You should find two formulas for C in terms of n. One will be for n < n0 and the other for n ≥ n0 .
Then find the values of n that minimizes c for each of the regions n < n0 and n ≥ n0 separately. Of
these two values find the one n∗ that minimizes C for n > 0.

(i) Assumptions with unit check

(ii) Objective

(iii) Formulate the model as a one-variable optimization problem.

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Math462/562 One Variable Optimization-HW1 Due date: Mon. September 23

(iv) Optimal number of crews

(v) Optimal cost

(vi) State your results in plain English.

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Math462/562 One Variable Optimization-HW1 Due date: Mon. September 23

9 A local daily newspaper with a circulation of 80,000 subscribers is thinking of raising its subscription price.
Currently the price is $1.50 per week, and it is estimated that the paper would lose 5,000 subscribers if the
rate were to be raised by ten cents/week.
Please use the following variables:
x = subscription price ($/papers)
s = number of subscribers (papers)
P = profit ($)

(a) Find the subscription price that maximizes profit.

i. Assumptions with unit check

ii. Objective

iii. Formulate the model as a one-variable optimization problem.

iv. Optimal subscription price x∗

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Math462/562 One Variable Optimization-HW1 Due date: Mon. September 23

v. Optimal profit P ∗

vi. Discuss the shortcomings of your model (Are all assumptions realistic, etc.)

(b) Let n be the number of lost subscribers per 10¢ increase in subscription price. Calculate the optimal
subscription price and profit assuming that this parameter is 3,000, 4,000, 5,000, 6,000, or 7,000.
lost subscribers per week optimal subscription price x∗ optimal profit P ∗

3,000

4,000

5,000

6,000

7,000

(c) Sensitivity of the optimal subscription price to n, S(x∗ , n), and its interpretation.

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Math462/562 One Variable Optimization-HW1 Due date: Mon. September 23

(d) Sensitivity of the optimal profit to n, S(P ∗ , n), and its interpretation.

(e) Should the paper change its subscription price? To answer this question, it may be helpful to compare
the current profit to the profit with 10% increase in subscription price. Justify your conclusions in
plain English.