1.

A diet for a sick person must contain at least 400 units of vitamins, 50 units of minerals
and 1400 units of calories. Three foods A, B and C are available at cost $4, $3 and $3.50
per unit respectively. If one unit of A contains 200 units of vitamins, 2 units of minerals
and 40 units of calories, one unit of B contains 100 units of vitamins, 3 units of minerals
and 30 units of calories and one unit of C contains 200 unit of vitamins, 2 unit of
minerals and 35 unit of calories, formulate it as a linear programming problem to find the
combination of food to be used to have the least cost.
Find the combination of the food by applying simplex method first and then you may
verify your final answer using EXCEL SOLVER. Perform also, using SOLVER,
sensitivity analysis of your solution.

2. The Goferbroke company owns a tract of land that may contain oil. A consulting
geologist has reported to the management that he believes there is one chance in four of
oil. Due to this prospect, another oil company has offered to purchase the land of $4
million. Goferbroke wants to decide whether to drill to find oil or to sell the land.
 Option 1: Directly determine whether to drill or sell
 Option 2: Conduct seismic experiment, then determine whether to drill
 Seismic experiment cost $2 million
 If result is favorable (40%), the chance of containing oil is 60%
 If result is unfavorable (60%), the chance of containing oil is 10%
 The drilling operation will cost $5 million
 If oil is found, the company will earn $40 million
 If the land sold without drilling, the company would earn $4 million.

QUESTIONS: Maximize the company’s earning, what strategy should they choose?
Analyze your strategy using decision tree.