Handout - LP

1.

Twenty-Century Hyena is planning next years shooting schedule. They make films for television and theater release. On the average a TV film cost $750,000 and is sold for $1.25 million. A theater release film cost approximately $2 million and returns $3 million. The shooting budget is limited to $25 million. It takes 12 weeks to shoot a TV film and 30 weeks for theater film. Management knows that for the next year they have the facilities for the equivalent of 600 weeks of shooting time. It is also known that at least seven films must be made for TV. Determine the number and type of films that will maximize profits.

2.

The Food and Agriculture Organizations research department has developed two high nutrient foods, one using soybean derivatives and the other fishmeals. Each unit of soybean food has 20 units of nutrient I and 60 units of nutrient II. Each unit of fishmeal food has 30 units of nutrient I and 20 units of nutrient II. FAO has determined the per capita daily minimum requirements of nutrient I and II to be 350 and 700 units, respectively. The cost of producing the soybean food is 20 cents/unit and 9 cents/unit for fishmeal food. The FOA wants to send food packets (separate for each individual) to famine-ridden areas. Determine the units of soybean food and fishmeal food that should be in each packet in order to minimize costs.

3.

The Slumber Lumber Company produces two products: bed frames and bed canopies. The profit margins, per dozen, is $60 for bed frames and $50 for canopies. Both products go through cutting and sanding process, which have a capacity of 40 and 50 hours/week, respectively. Each dozen bed frames consume two hours of cutting and one hour of sanding capacity. Every dozen units of canopies use up 1.25 hours of cutting and one hour of sanding capacity. How can the company maximize its profits? The Manufacturer Limited produces two products, I and II, on a plant that consists of three production departments: cutting, mixing and packaging. The equipment in each department can be used for eight hours per day. The process and time required is summarized below: i. Product I is first cut and then packaged. Each ton of this product uses 1/2 hours for cutting and 1/3 hours for packaging. ii. Product II is first mixed and then packaged. Each ton of this product uses one hour of mixing and 2/3 hours of packaging. The net profits from product I and II are estimated at Rs.40 and Rs.30 per ton respectively. How many tons of each product should be produced to earn maximum profit.

4.

Handout - LP

5.

A federal agency has a budget of $1 billion in the form of grants for innovative research in the area of energy alternatives. A management review team consisting of scientists and economists has made a preliminary review of 200 applications, narrowing the field to 6 finalists. Each of the six finalists projects have been evaluated and scored in relation to potential benefits expected over the next ten years. These estimated benefits are shown in the table below. They represent the net benefits per dollar invested in each alternative. Net Benefit per dollar invested 4.4 3.8 4.1 3.5 5.1 3.2 Requested level of funding ($ in million) 220 180 250 150 400 120

Project Solar-1 Solar-2 Synthetic fuels Coal Nuclear Geothermal

Above table also shows the requested level of funding. These figures represent the maximum amount, which can be awarded to any project. The agency can award any amount up to the indicated maximum for a given project. Similarly, the president has mandated that the nuclear project should be funded to al least 50% of the requested amount. The agencys administrator has a strong interest in solar projects and has requested that the combined amount awarded to the two projects should be at least $300 million. Apart from above, following constraints should also be considered. i. ii. iii. iv. v. Each project should receive at least 20% of the requested amount. The amount awarded for the synthetic fuel project should be at least as much as that awarded for the coal project. Combined funding for the geothermal project and synthetic project should be at least $30 million. Funding for the nuclear project should be at least 40% greater then the funding for the geothermal project. Funding for the Solar-2 should be no more then 80% of the funding for Solar-1.

Formulate a LP model to determine the amount of money to be awarded to each project in order to maximize total benefits.

Handout - LP

6.

An advertising company wishes to plan an advertising campaign in three different media television, radio and magazines. The purpose of the advertising program is to reach as many potential customers as possible. Results of a market study are given below; Television Day Time Prime Time Radio Magazine Cost of an advertising unit 40,000 75,000 30,000 15,000 (Rs.) Number of potential 400,000 900,000 500,000 200,000 Customer reached Per unit Number of women customers 300,000 400,000 200,000 100,000 reached per unit The company does not want to spend more than Rs.800,000 on advertising. It further requires that (1) at least 2 million exposures take place among women; (2) advertising on television be limited to Rs.500,000; (3) at least three advertising units be bought on daytime television, and two units during prime time; (4) the number of advertising units on radio and magazine should each be between five and ten.

7.

The management of Green Corporation wants to invest, for a specified period, a sum of Rs.100 million and wants to maximize expected annual return. The finance department of the company is asked to provide data regarding expected yields from good quality common and preferred stocks, corporate bonds, government bonds, and saving certificates. The relevant information regarding expected annual yields of different categories of investment is given below: Category of Investment Common Stocks Preferred stocks Corporate bonds Government bonds Savings certificates Expected Annual Yield (per cent) 5 7 10 8 6

Assume that these returns are stale and that, for the planning horizon, they will remain constant. Assume further that the diversification goals of the management are specified by these statements: 1. Investment in common and preferred stocks should not be more than 30 percent of the total investment. 2. Investment in government bonds should not be less than investment in savings certificates. 3. The investment in corporate and government bonds should not be more than 50 percent of the total investment.