GMBA 402C

HOMEWORK #1
DUE SEP. 15

1. Fresh Dairy Farms has two different machines for processing raw milk into low-fat milk,
butter, and cheese. The amount of time required on each machine to produce each unit of
resulting product and the net profits are provided in the following table:

Low-fat Milk Butter Cheese
Machine 1 0.2 min/gal 0.5 min/lb 1.5 min/lb
Machine 2 0.3 min/gal 0.7 min/lb 1.2 min/lb
Net Profit $0.22 /gal $0.38 /lb $0.72 /lb

Assuming that 8 hours of time are available each day on each machine, as manager of the
Production Department, formulate a model to determine a daily production plan that
maximizes the net corporate profits and yields a minimum of 300 gallons of low-fat milk, 200
pounds of butter, and 100 pounds of cheese. (Note: Any amount of milk can be produced on
either machine without having to use the other machine. The same is true for each of the
other two products.) Build a mathematical model using variables, an objective function, and
constraints and classify the model using the scheme presented in class. (15 points)

2. The Leather Company produces baseball gloves, footballs, and leather straps using raw
leather that is processed on a machine. For the coming week, there are 1000 square meters of
leather and 40 hours of machine time available. The manager wants to determine a production
plan for this week that maximizes the net corporate profits.
(a) Identify the variables. (5 points)
(b) Identify and assign a symbolic name to each additional data value you would have to
obtain to be able to formulate a mathematical model. (5 points)
(c) Formulate a mathematical model using the variable names from part (a) and the symbolic
names for the data from part (b). Classify the model using the scheme presented in class.
(5 points)

3. Each week, Florida Citrus, Inc., uses a single machine for 150 hours to distill orange and
grapefruit juice into concentrates that are then stored in two separate 1000-gallon tanks (one
for orange juice and one for grapefruit juice) before being frozen. The machine can process
25 gallons of orange juice per hour but only 20 gallons of grapefruit juice. Each gallon of
orange juice cost $1.50 and loses 30% in water content when distilled into a concentrate that
then sells for $6.00 per gallon. Each gallon of grapefruit juice costs $2.00 and loses 25%
when distilled into a concentrate that then sells for $8.00 per gallon. Formulate a model to
determine a production plan to maximize the profit for the coming week using the following
variables: (15 points)

OJ =the number of gallons of orange juice to use this week,
GJ = the number of gallons of grapefruit juice to use this week.

4. ASA is a large steel company that produces each of five different types of iron plates at its
eight factories. At a recent strategic-planning meeting, the management allocated the budgets
in Table 1 to each of the eight factories for the next fiscal year. These budgets were based, in
part, on the demands in Table 2 for the five iron plates, provided by the Sales Department.
As vice president of production, you, Mr. Leroy Adams, have been asked to determine a
production plan for each of the eight factories. (50 points)

Table 1. The Budget Assigned to Each Factory (in Thousands of Dollars)

Factory 1 2 3 4 5 6 7 8
Budget 900 1050 950 1050 1000 1600 950 1050


Table 2. The Demand in Tons for Each Type of Iron Plate

Plate Type 1 2 3 4 5
Demand 450 800 500 650 180

In preparation to formulate such a plan, you asked your associate, Mr. J ames Aaron, to obtain
production costs for each of the five iron plates at each of the eight factories. At your next
meeting, Mr. Aaron brought the cost data in Table 3. He also pointed out that, as external
suppliers, ASA has three subcontractors from which they can purchase precisely the amounts
of different types of iron plates at the prices shown in Table 4. Mr. Aaron reminded you that
contractual obligations require that if a particular subcontractor is chosen, ASA must
purchase all of that suppliers five types of iron plates at the indicated prices. You can, of
course, choose to purchase from none, one, two, or all three subcontractors. When you
relayed this information to Mr. Charles Bentley, the CEO, he approved the use of
subcontractors if it would lower the total costs and informed you that the cost for buying the
iron plates from the subcontractors would not affect the budgets of any of the factories (see
Table 1).

As production manager, formulate a model to determine a production plan for each of the
eight factories and which subcontractor(s), if any, to buy iron plates from to minimize the
total costs while staying within each factory's budget and at least meeting the given demands.

The Table 3. The Cost of Producing One Ton of Each Iron Plate Type i at Factory j
(in Thousands of Dollars)

Factory 1 2 3 4 5 6 7 8
Plate Type
1 5 3 4 3 3 4 6 4
2 3 4 6 2 5 3 6 4
3 7 6 5 8 4 3 4 5
4 6 6 6 5 3 5 5 4
5 8 9 8 7 10 9 8 6


Table 4. The Cost per Ton and the Amount of Each Plate Type Available from Each
Subcontractor

Subcontractor 1 Subcontractor 2 Subcontractor 3
Plate Type Cost
a
Amount
b
Cost
a
Amount
b
Cost
a
Amount
b

1 5 40 4 10 5 20
2 5 20 8 80 6 40
3 5 30 6 50 6 10
4 3 40 4 20 5 10
5 5 20 3 10 4 50

a
Cost ($000) to purchase one ton of plate type i from a subcontractor.
b
For any subcontractor used, all of its available amounts of all five types of iron plates
must be purchased at the indicated costs.