Answer Keys of Ch.

3. x1 = $ automobile loans
x2 = $ furniture loans
x3 = $ other secured loans
x4 = $ signature loans
x5 = $ "risk free" securities

Max 0.08x1 + 0.10x2 + 0.11x3 + 0.12x4 + 0.09x5

s.t.
x5  600,000 [1]
x4  0.10(x1 + x2 + x3 + x4)
or -0.10x1 - 0.10x2 - 0.10x3 + 0.90x4  0 [2]
x2 + x3  x1
or - x1 + x2 + x3  0 [3]
x3 + x4  x5
or + x3 + x4 - x5  0 [4]
x1 + x2 + x3 + x4 + x5 = 2,000,000 [5]

x1, x2, x3, x4, x5  0

Solution:
Automobile Loans (x1) = $630,000
Furniture Loans (x2) = $170,000
Other Secured Loans (x3) = $460,000
Signature Loans (x4) = $140,000
Risk Free Loans (x5) = $600,000

Annual Return $188,800 (9.44%)

5. a. Let W = # of servings of Wimpy to make

D = # of servings of Dial 911 to make

Max .45 W + .58 D

s.t.
.25 W + .25 D ≤ 20 (Beef)
.25 W + .4 D ≤ 15 (Onions)
5 W + 2 D ≤ 88 (Special Sauce)
5 D ≤ 60 (Hot Sauce)
W, D ≥ 0

b. Solution: W = 12.8, D = 12, Profit = $12.72.

c. Dual value for special sauce = $.09

d. Solution: W=13, D=12, Profit = $12.81. Note: $12.81-$12.72 = $.09. Dual value confirmed.
11. Let xij = units of component i purchased from supplier j

Min 12x11 + 13x12 + 14x13 + 10x21 + 11x22 + 10x23

s.t.
x11 + x12 + x13 = 1000
x21 + x22 + x23 = 800
x11 + x21  600
x12 + x22  1000
x13 + x23  800

x11, x12, x13, x21, x22, x23  0

Solution:
Supplier
1 2 3

Component 1 600 400 0

Component 2 0 0 800
Purchase Cost = $20,400
17. a. Let FM = number of frames manufactured
FP = number of frames purchased
SM = number of supports manufactured
SP = number of supports purchased
TM = number of straps manufactured
TP = number of straps purchased

Min 38FM + 51FP + 11.5SM + 15SP + 6.5TM + 7.5TP

s.t.
3.5FM + 1.3SM + 0.8TM  21,000
2.2FM + 1.7SM  25,200
3.1FM + 2.6SM + 1.7TM  40,800
FM + FP  5,000
SM + SP  10,000
TM + TP  5,000
FM, FP, SM, SP, TM, TP  0.

Solution:
Manufacture Purchase
Frames 5000 0
Supports 2692 7308
Straps 0 5000

b. Total Cost = $368,076.91

c. Subtract values of slack variables from minutes available to determine minutes used. Divide by 60
to determine hours of production time used.

Constraint
1 Cutting: Slack = 0 350 hours used
2 Milling: (25200 - 9623) / 60 = 259.62 hours
 3 Shaping: (40800 - 18300) / 60 = 375 hours

d. Nothing, there are already more hours available than are being used.

e. Yes. The current purchase price is $51.00 and the reduced cost of 3.577 indicates that for a purchase
price below $47.423 the solution may improve. Resolving with the coefficient of FP = 45 shows
that 2714 frames should be purchased.

The optimal solution is as follows:

OPTIMAL SOLUTION

Optimal Objective Value

361500.00000

Variable Value Reduced Cost

FM 2285.71429 0.00000
FP 2714.28571 3.57692
SM 10000.00000 0.00000
SP 0.00000 0.00000
TM 0.00000 1.15385
TP 5000.00000 0.00000

Constraint Slack/Surplus Dual Value

1 0.00000 -2.69231
2 3171.42857 0.00000
3 7714.28571 0.00000
4 0.00000 47.42308
5 0.00000 15.00000
6 0.00000 7.50000

25. Let x1 = number of part-time employees beginning at 11:00 a.m.

x2 = number of part-time employees beginning at 12:00 p.m.
x3 = number of part-time employees beginning at 1:00 p.m.
x4 = number of part-time employees beginning at 2:00 p.m.
x5 = number of part-time employees beginning at 3:00 p.m.
x6 = number of part-time employees beginning at 4:00 p.m.
x7 = number of part-time employees beginning at 5:00 p.m.
x8 = number of part-time employees beginning at 6:00 p.m.

Each part-time employee assigned to a four-hour shift will be paid $7.60 (4 hours) = $30.40.
-
Min 30.4x1 + 30.4x2 + 30.4x3 + 30.4x4 + 30.4x5 + 30.4x6 + 30.4x7 + 30.4x8 Part-Time
Employees Needed
s.t.
 x1  8 11:00 a.m.
x1 + x2  8 12:00 p.m.
x1 + x2 + x3  7 1:00 p.m.
x1 + x2 + x3 + x4  1 2:00 p.m.
x2 + x3 + x4 + x5  2 3:00 p.m.
x3 + x4 + x5 + x6  1 4:00 p.m.
x4 + x5 + x6 + x7  5 5:00 p.m.
x5 + x6 + x7 + x8  10 6:00 p.m.
x6 + x7 + x8  10 7:00 p.m.
x7 + x8  6 8:00 p.m.
x8  6 9:00 p.m.
-
xj  0 j = 1,2,...8

Full-time employees reduce the number of part-time employees needed.

A portion of the solution output to the model follows.

OPTIMAL SOLUTION

Optimal Objective Value

608.00000

Variable Value Reduced Cost

X1 8.00000 0.00000
X2 0.00000 0.00000
X3 0.00000 0.00000
X4 0.00000 0.00000
X5 2.00000 0.00000
X6 0.00000 0.00000
X7 4.00000 0.00000
X8 6.00000 0.00000

Constraint Slack/Surplus Dual Value

1 0.00000 30.40000
2 0.00000 0.00000
3 1.00000 0.00000
4 7.00000 0.00000
5 0.00000 30.40000
6 1.00000 0.00000
7 1.00000 0.00000
8 2.00000 0.00000
9 0.00000 30.40000
10 4.00000 0.00000
11 0.00000 0.00000
 The optimal schedule calls for
8 starting at 11:00 a.m.
2 starting at 3:00 p.m.
4 starting at 5:00 p.m.
6 starting at 6:00 p.m.

b. Total daily salary cost = $608

There are 7 surplus employees scheduled from 2:00 - 3:00 p.m. and 4 from 8:00 - 9:00 p.m.
suggesting the desirability of rotating employees off sooner.

c. Considering 3-hour shifts

Let x denote 4-hour shifts and y denote 3-hour shifts where

y1 = number of part-time employees beginning at 11:00 a.m.

y2 = number of part-time employees beginning at 12:00 p.m.
y3 = number of part-time employees beginning at 1:00 p.m.
y4 = number of part-time employees beginning at 2:00 p.m.
y5 = number of part-time employees beginning at 3:00 p.m.
y6 = number of part-time employees beginning at 4:00 p.m.
y7 = number of part-time employees beginning at 5:00 p.m.
y8 = number of part-time employees beginning at 6:00 p.m.
y9 = number of part-time employees beginning at 7:00 p.m.

Each part-time employee assigned to a three-hour shift will be paid $7.60 (3 hours) = $22.80

New objective function:

Each constraint must be modified with the addition of the yi variables. For instance, the first
constraint becomes

x1 + y1  8

and so on. Each yi appears in three constraints because each refers to a three hour shift. The optimal
solution is shown below.

x8 = 6 y1 = 8
y3 = 1
y5 = 1
y7 = 4

Optimal schedule for part-time employees:

4-Hour Shifts 3-Hour Shifts

 x8 = 6 y1 = 8
y3 = 1
y5 = 1
y7 = 4

Total cost reduced to $501.60. Still have 20 part-time shifts, but 14 are 3-hour shifts. The surplus
has been reduced by a total of 14 hours.