No.

1 – Assignment
Zales Jewelers uses rubies and sapphires to produce two types of
rings. A Type 1 ring requires 2 rubies, 3 sapphires, and 1 hour of
jeweler’s labor. A Type 2 ring requires 3 rubies, 2 sapphires, and 2
hours of jeweler’s labor. Each Type 1 ring sells for $400; type 2 sells
for $500. All rings produced by Zales can be sold. At present, Zales
has 100 rubies, 120 sapphires, and 70 hours of jeweler’s labor.
Extra rubies can be purchased at a cost of $100 per ruby. Market
demand requires that the company produce at least 20 Type 1 rings
and at least 25 Type 2.

To maximize profit, Zales should solve this LP problem:

No. 1 – Assignment
Please, help Zales problem by:
a) Defining the variables
b) Defining the objective function
c) Defining the constraints
d) Solve the formulation above by using optimization software
(Excel Solver, Lingo, etc.)

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 No. 1 – Assignment
Use the software output in the previous question, answer the
following questions:
e) Suppose that instead of $100, each ruby costs $190. Would
Zales still purchase rubies? What would be the new optimal
solution to the problem?
f) Suppose that Zales were only required to produce at least 23
Type 2 rings. What would Zales’ profit now be?
g) What is the most that Zales would be willing to pay for another
hour of jeweler’s labor?
h) What is the most that Zales would be willing to pay for another
sapphire?

No. 2 – Assignment
Stickley Furniture is a manufacturer of fine hand-crafted furniture. During the
next production period, management is considering producing dining room
tables, dining room chairs, and/or bookcases. The time required for each item to
go through the two stages of production (assembly and finishing), the amount of
wood required (fine cherry wood), and the corresponding unit profits are given
in the following table, along with the amount of each resource available in the
upcoming production period.

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 No. 2 – Assignment
Please, help Stickley Furniture by formulating the problem:
a) Defining the variables
b) Defining the objective function
c) Defining the constraints
d) Solve the formulation above by using optimization software (Excel Solver,
Lingo, etc.)

Use the software output in the previous question, answer the following
questions:
e) Suppose the profit per table increases by $100. Will this change the optimal
production quantities? What can be said about the change in total profit?
f) Suppose the profit per chair increases by $100. Will this change the optimal
production quantities? What can be said about the change in total profit?

No. 2 – Assignment
e) Suppose the profit per table increases by $90 and the profit per bookcase
decreases by $50. Will this change the optimal production quantities? What
can be said about the change in total profit?
f) Suppose a worker in the assembly department calls in sick, so eight fewer
hours now are available in the assembly department. How much would this
affect total profit? Would it change the optimal production quantities?
g) Explain why the shadow price for the wood constraint is zero.
h) A new worker has been hired who is trained to do both assembly and
finishing. She will split her time between the two areas, so there now are
four additional hours available in both assembly and finishing. How much
would this affect total profit? Would this change the optimal production
quantities?
i) Based on the sensitivity report, is it wise to have the new worker in part h
split her time equally between assembly and finishing, or would some other
plan be better?