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BDS4614, MANAGEMENT DECISION SCIENCE

Tutorial 1

1. The Outdoor Furniture Corporation manufactures two products, benches and picnic tables for use in
yards and parks. The firm has two main resources: its carpenters (labor force) and supply of redwood
for use in the furniture. During the next production cycle, 1200 hours of labor are available under a
union agreement. The firm also has a stock of 3500 board feet of good quality redwood. Each bench that
Outdoor Furniture produces requires 4 labor hours and 10 board feet of redwood; each picnic table takes
6 labor hours and 35 board feet of redwood. Completed bench will yield a profit of $9 each, and tables
will result in a profit of $20 each. How many benches and tables should Outdoor Furniture produce to
obtain the largest possible profit? Use the graphical LP approach.

2. The dean of the Western College of Business must plan the school’s course offerings for the fall
semester. Student demands make it necessary to offer at least 30 undergraduate and 20 graduate courses
in the term. Faculty contracts also dictate that at least 60 courses be offered in total. Each undergraduate
course taught costs the college an average of $2500 in faculty wages, and each graduate course costs
$3000. How many undergraduate and graduate courses should be taught in the fall so that total faculty
salaries are kept to a minimum?

3. Consider the following LP problem:

Maximize profit = 5X + 6Y
Subject to 2X + Y ≤ 120
2X + 3Y ≤ 240
X, Y ≥ 0

a. What is the optimal solution to this problem? Solve it graphically.


b. If a technical breakthrough occurred that raised the profit per unit of X to $8, would this affect the
optimal solution?
c. Instead of an increase in the profit coefficient to $8, suppose that profit was overestimated and
should only have been $3. Does this change the optimal solution?

4. Maximize
profit =$3X1 +$5X2
Subject to X2 ≤ 6
3X1 +2X2 ≤ 18
X1, X2 ≥ 0
Solve the above problem using simplex method.

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BDS4614, MANAGEMENT DECISION SCIENCE

5. A candy company makes three types of candy, solid-center, fruit-filled, and cream-filled, and packages
these candies in three different assortments. A box of assortment I contains 4 solid center, 4 fruit-filled
and 12 cream filled candies and sells for $9.40. A box of assortment II contains 12 solid-center, 4 fruit-
filled and 4 cream filled candies, and sells of $7.60. A box of assortment III contains 8 solid-center, 8
fruit-filled, and 8 cream filled candies and sells for $11.00. The manufacturing costs per piece of candy
are $0.20 for solid-center, $0.25 for fruit-filled and $0.30 for cream-filled. The company can
manufacture 4800 solid center, 4000 fruit-filled and 5600 cream-filled candies weekly.
a. Formulate the above problem as a Linear programming problem.
b. Set up the initial simplex tableau for the above linear programming problem

Given the following final tableau


Cj 4 3 5 0 0 0
Solution X1 X2 X3 S1 S2 S3 Quantity
Mix
3 X2 0 1 0 0.125 -0.125 0 100
5 X3 0 0 1 -0.0625 0.25 -0.0625 350
4 X1 1 0 0 0 -0.125 0.125 200
Zj 4 3 5 0.0625 0.375 0.1875 2850
Cj - Z j 0 0 0 -0.0625 -0.375 -0.1875
S1 – slack for total solid-center candies to be manufactured
S2 – slack for total fruit-filled candies to be manufactured
S3 – slack for total cream-filled candies to be manufactured

c. How many boxes of each type should the company produce each week in order to maximize their
profit?
d. What are the shadow prices of the three constraints and explain what does it mean?
e. Determine the range of optimality for the profit contribution rate of assortment I.
f. Determine the range for the right-hand side of the third constraint without changing the dual price.

6. A small accounting firm prepares tax returns for three types of customers: individual, commercial and
industrial. The tax preparation process begins with an 1 hour interview with the customer. The data
collected during this interview are entered into a time-sharing computer system, which produces the
customer’s tax return. It takes 1 hour to enter the data for an individual customer, 2 hours for a
commercial customer, and 1 ½ hours for an industrial customer. It takes 10 minutes of computer time to
process an individual return, 25 minutes to process a commercial return, and 20 minutes to process an
industrial return. The firm has one employee who conducts the initial interview and two who enter the
data into the computer. The interviewer can work a maximum of 50 hours a week, and each of the data-
entry employees can work a maximum of 40 hours a week. The computer is available for a maximum of
1025 minutes a week. The firm makes a profit of $50 on each individual customer, $65 on each
commercial customer and $60 on each industrial customer.
a. Formulate the given problem as a Linear Programming Problem.
b. Set up the initial simplex tableau by including the necessary slack variables.

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BDS4614, MANAGEMENT DECISION SCIENCE

Given the following final tableau


Cj 50 65 60 0 0 0
Solutio X1 X2 X3 S1 S2 S3 Quantity
n Mix
50 X1 1 0 0 1 2 -0.2 5
65 X2 0 1 0 -2 4 -0.2 15
60 X3 0 0 1 2 -6 0.4 30
Zj 50 65 60 40 0 1 3025
Cj - Z j 0 0 0 -40 0 -1
S1 – slack for Interviewer time available
S2 – slack for Data entry time available
S3 – slack for Computer time available

c. How many customers of each type should the firm schedule each week in order to maximize its
profit and what is the maximum profit?
d. What are the shadow prices of the three constraints and explain the meaning?
e. Which of the constraints are binding and explain why?
f. Determine the range of optimality for the profit contribution rate of commercial customer.
g. Determine the range for the right-hand side of the Data entry time constraint without changing the
dual price.

7. A contractor is planning to build a new housing development consisting of colonial, split-level, and
ranch-style houses. A colonial house requires ½ acres of land, $60,000 capital and 4,000 labor hours to
construct and returns a profit of $20,000. A split-level house requires ½ acres of land, $60,000 capital
and 3,000 labor hours to construct and returns a profit of $18,000. A ranch house requires 1 acre of
land, $80,000 capital, 4,000 labor-hours to construct and returns a profit of $24,000. The contractor has
available 30 acres of land, $3,200,000 capital and 180,000 labor-hours.
a. Formulate the above problem as a Linear programming problem.
b. Set up the initial simplex tableau for the above linear programming problem

Given the following final tableau


Cj 20000 18000 24000 0 0 0
Solution X1 X2 X3 S1 S2 S3 Quantity
Mix
2400 X3 0 0 1 3 0 0 10
0
1800 X2 0 1 0 -4 0.001 -0.001 20
0
2000 X1 1 0 0 0 -0.0001 0.001 20
0
Zj 20000 18000 24000 0 0.2 2 1,000,000
Cj - Z j 0 0 0 0 -0.2 -2
S1 – slack for total acres of land available

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BDS4614, MANAGEMENT DECISION SCIENCE

S2 – slack for total capital


S3 – slack for total labor hours available
c. Determine the optimal number of houses of each type that should be built and the maximum profit.
d. Determine the dual price of labor hours available and discuss the effect of increasing the labor hours
on total profit.
e. Determine the range of optimality for the profit contribution rate of split-level house.
f. Determine the range for the right-hand side of the third constraint without changing the dual price.

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