MBAA 544: Operations Management

Assignment # 2
Due: Week 9 (before the class starts)

Refer to the last page for a suggested format for assignments

Question 1 (60 marks)

You have been hired by a small college in Burnaby to assist the campus dietician in formulating a
nutritious evening meal plan for students. The dietician feels that for each evening meal the
following five requirements should be met: (1) between 1000 and 1500 calories (cal); (2) at least
5 milligrams(mgr) of iron; (3) no more than 60 grams (gr) of fat; (4) at least 50 grams (gr) of
protein; and (5) no more than 60 grams (gr) of carbohydrates. In addition, the dietician feels that
potatoes should be at least 20% of the total weight of the evening meal.

On a particular day, the college’s food stock includes seven items that can be prepared and
served for the evening meal to meet these requirements. The cost per kilogram for each food
item and its contribution to each of the five nutritional requirements is given in the following table:
FOOD IRON FAT PROTEIN CARBOHY COST
CALORIES
ITEM (mg/kg) (g/kg) (g/kg) DRATES ($/kg)
(cal/kg)
(g/kg)
Milk 295 0.2 16 16 22 0.70
Ground Meat 1216 0.2 96 81 0 2.50
Chicken 394 4.3 9 74 0 1.80
Beans 128 3.2 0.8 7 28 0.70
Fish 358 3.2 0.5 83 0 2.40
Spinach 118 14.1 1.4 14 19 1.20
Potatoes 279 2.2 0.5 8 63 0.40

Your job is to find the combination and quantities of these food items that will provide the nutrition
the college dietician requires at the smallest possible food cost.
Note: Some questions below only require you to report numbers that are easily read from your Model or
Sensitivity Report. Other questions will require calculations, and you must show these calculations to
receive full marks. NO MARKS WILL BE AWARDED for answering the following questions by developing
a revised formulation of the LP model and re-solving with Solver.

Use only the Excel Model and Sensitivity Report to answer the following questions

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Questions are independent.

(a) Develop a model of this problem on a spreadsheet and solve using Solver. What is the
least possible cost per meal? Is the optimal solution a well balanced diet? Explain.

(b) If milk prices increase by $0.30/kg, will this change the optimal diet? Explain.

(c) If ground meat prices increase from $2.35/kg to $2.75/kg, what can you say about the
optimal diet and corresponding cost? Explain. What percentage price increase in ground
meat will not change the optimal diet?

(d) How sensitive is the optimal diet to changes in fish prices? Explain.

(e) If chicken prices increase to $2.00/ kg, would you suggest removing chicken from the diet?
Explain.

(f) Suppose after careful consideration, the dietician decides that the minimum iron
requirement must be at least 10 mgr. What specific effect would this have on the cost of
the diet? Would the optimal diet change? Explain.

(g) As a result of a new Canadian study about obesity, the campus dietician has decided to
reduce the daily fat requirement by 5 grams. What specific effect would this have on the
cost of the diet? Would the optimal diet change? Explain.

(h) Suppose the campus dietician decides to implement both of the changes indicated in parts
(f) and (g) above. If these changes are done at the same time, what would you tell the
dietician about the effect these two changes would have on the cost of the diet?

(i) If the maximum calorie requirement was reduced to 1,400 calories, what specific effect
would this have on the cost of the diet? Explain. Would the optimal diet change? Explain.

(j) Does the dietician’s requirement that potatoes be at least 20% of the total diet weight
influence the optimal solution?

(k) Print out your spreadsheet model and sensitivity report in landscape orientation fitted to
one page each, and include them with your answers. You do NOT need to use a color
printer.

(l) Formulate the above model algebraically. Be sure to clearly define your decision variables
and show your complete linear programming formulation. DO NOT SOLVE.

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QUESTION 2 (5 marks)

Your uncle runs a small business. He understands financial terms like profit, revenue, and cost,
but has no LP knowledge. Explain "reduced cost" in terms that he will understand. You may want
to refer to your textbook.

QUESTION 3 (45 marks)

Frandec Company manufacturers, assembles and rebuilds material handling equipment used in
warehouses and distribution. One product, called a Liftmaster, is assembled from four
components: a frame, a motor, two supports, and a metal strap. Frandec’s production schedule
calls for 5,000 Liftmasters to be made next month. Frandec purchases the motors from an
outside supplier, but the frames, supports, and straps may either be manufactured by the
company or purchased from an outside supplier. Manufacturing and purchase costs per unit are
as follows:

Component Manufacturing Cost Purchase Cost

Frame $36.00 $51.00
Support $11.50 $15.00
Strap $6.50 $7.50

Three departments are involved in the production of these components. The time (in minutes per
unit) required to process each component in each department and the available capacity (in
hours) for the three departments are as follows:

Department Production Time per unit (minutes) Time Available

Frame Support Strap Hours
Cutting 3.5 1.3 0.4 348
Milling 2.2 1.7 0 420
Shaping 3.1 2.6 1.7 680

Except as noted, use only the Excel Model and Sensitivity Report to answer the questions below.

Some questions below only require you to report numbers that are easily read from your model
or sensitivity report. Other questions may require calculations, and you must show these
calculations to receive full marks. Questions are independent.

(a) Set up the above problem in Excel using the style that we used in class. Make sure that
your spreadsheet model is logical, well organized and easy to understand. Solve using
Solver.
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 (b) What recommendations would you give to management in terms of how many units of
each component should be made and how many should be purchased?

(c) If management follows your recommendations presented in part (a) above, what would be
the expected cost?

(d) Which department(s) are limiting the manufacturing volume?

(e) Suppose management could arrange for exactly 100 hours of additional cutting time. (I)
What specific effect would this change have on total cost? (ii)Would the optimal solution
change? Explain.

(f) Suppose management wanted to have an extra 10 frames that they could use for spare
parts. (I) What specific effect would this change have on total cost? (ii)Would the optimal
solution change? Explain.

(g) You will notice that in the optimal solution, no frames are purchased. Using the information
provided by the reduced cost, comment on what this reduced cost number means. (Hint:
You will have to refer to your textbook to get information on reduced cost).

(h) Print out your spreadsheet model printed on one page in landscape orientation and
include it with your answers. You do NOT need to use a color printer.

(i) Print out your Sensitivity Report printed on one page in landscape orientation and include
it with your answers. You do NOT need to use a color printer.

(j) Suppose another manufacturer has offered to sell frames to Frandec for $45 each. Re-
solve the Excel model with the frame purchase cost of $45 and report on any changes to
the optimal solution and any cost savings/increases that may result. (Note: You will notice
that some of your answers will be fractional. In this question, a reasonable thing to do is round off
these fractional values to more appropriate values and report those (rounded) values to
management. Make sure your rounded values do not violate any constraints.). Include a
printout of this re-solved model with this homework.

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A typical homework assignment should have the following:

1. Your answers

Answers should be submitted in soft copies preferably in MS Word.

2. A Cover page
- which includes the course name, the date, the homework number, your name (LASTNAME in
uppercase letters please), your student number, your group number. No other information is
necessary or wanted! The template below may be useful as a guide.

MBAA 544

Week 9

Assignment # 2

Group #

Group Members:

CHAN, Jennifer # 12345990

BYE, Good # 56439768

DAY, Sunny # 18309352

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