Problems

Graphical Method
#1. A company manufactures and sells 2 types of products: A and B.
The cost of production of each unit of A and B is $ 200 and $ 150 respectively.
Each unit of A yields a profit of $ 20 and each unit of B yields a profit of $ 15 on selling.
Company estimates that monthly demand of A and B to be at a maximum of 500 units in all.
The production budget for the month is set at $ 50,000.
How many units should the company manufacture in order to earn maximum profit from its monthly sales
of A and B?

Answer:

Cost Profit Demand Budget

A $200 $20 500 $50,000
B $150 $15

Let A be x and B be y x + y <= 500 200x + 150y <= 50000 P = 20x + 15y

Vertices

A = (0,0)
B = (-500,0)
C = (0,330)
D = (-500,1000)

P(A) = 20(0) + 15(0)

P(A) = 0

P(B) = 20(-500) +15(0)

P(B) = -10000

P(C) = 20(0) + 15(330)

P(C) = 4950

P(D) = 20(-500) + 15(1000)

P(D) = -10000 + 15000
P(D) = 5000

The company must manufacture -500 unit of type A and 1000 unit of type B in order to maximize
profit.

Simplex Method

# 2. A marketing manager is considering advertising on radio, television and print media.

The cost of advertisement is follows.

Mode of Advertisement Cost per Ad

 Radio $ 100
Television $ 1, 250
Print media $ 70

She wants to place at the most 10 ads on television and at least 15 ads in the newspaper.
A maximum of 35 slots are available for advertisement in all.
In what combination should she place the ads so as to incur the minimum advertisement cost?

Answer:

Minimize Z= 100R + 1250T+ 70P

Subject to:
10T + 15P≤35
10T+ 15R≤35
15P+10≤35
Z= 100R +1250T+ 70P+0s1 +0s2 +0s3
10T +15P+S1 = 35
10P+ 10R+ S2 = 35
15P+10r + S3 = 35
R T P S1 S2 S3 ≥ 0

CB1 C1 100 1250 70 0 0 0 Solution Ratio

Basic
variable R T P S1 S2 S3

0 S1 0 10 15 1 0 0 35 2.33

0 S2 10 10 0 0 1 0 35 35

0 S3 10 0 15 0 0 1 35 2.33

Optimality Condition for minimization all c1 –z1 ≥

Iteration 1

CB1 C1 100 1250 70 0 0 0 Solution Ratio

Basic variable R T P S1 S2 S3
0 S2 10 10 0 1 0 0 35 0

0 S3 10 -10 -2 0 0 0 -34 68

70 P 0 2/3 1 1/15 0 0 35/15 7/45

Z1 4 40.67 70 4.67 0 0 163.33

C1- Z1 96 1209.33 0 4.67 0 0

Iteration 2

CB1 C1 100 1,250 70 0 0 0 Solution Ratio

Basic
R T P S1 S2 S3
variable

0 S1 0 2/3 1 1/15 0 0 0

0 S2 10 10 0 0 1 0 35

0 S3 10 -8.67 -1 0.8 0 0 -34

Z1 0 0 0 0 0 0 0

C1-Z1 100 1250 70 0 0 0

Conclusion, 0 is the optimum solution

Maximization & Minimization

#3. A company produces two types of tables, T1 and T2.

It takes 2 hours to produce the parts of one unit of T1, 1 hour to assemble and 2 hours to polish.
It takes 4 hours to produce the parts of one unit of T2, 2.5 hour to assemble and 1.5 hours of polish.
Per month, 7000 hours are available for producing the parts, 4000 hours for assembling the parts and 5500 hours
for polishing the tables.
The profit per unit of T1 is $90 and per unit of T2 is $110.
How many of each type of tables should be produced in order to maximize the total monthly profit?
Answer:

A at (0,0)
B at (0,1600)
C at (1500,1000)
D at (2300,600)
E at (2750,0)

Evaluate profit P(x,y) at each vertex

A at (0,0):P(0,0)=0
B at (0.1600):P(0,1600)=90(0)+110(1600)=176000
C at (1500,1000):P(1500,1000)=90(2500)+110(1000)=245000
D at (2300,600):P(2300,600)=90(2300)+110(600)=273000
E at (2750,0):P(2750,0)=90(2750)+110(0)=247500

The maximum profit of $273000 is at vertex D. Hence the company needs to product 2300 tables of type
T1 and 600 tables of type T2 in order to maximize its profit.