JULIAS FOOD BOOTH:

Total area: 36*48 = 1728

Let P = Number of Pizza Slices
H = Number of Hot Dogs
B = Number of Barbecue Sandwiches
Individual Area:
Pizza = 154
Hot dog = 16
Barbecue Sandwich - 25
Cost for each:
Pizza: 1.5 6/8 =
Hot Dog: 1.5-0.45 =
Barbecue Sandwich: 2.25-0.9 =
FORMULATION:
1.

Pizza:
To find area:
Total area: 14*14 = 196 inches square
For each slice: 196/8 = 24 inches per slice
Similarly the given areas for

2.
3.

Hot dogs: 16 square inches

Barbecue Sandwiches = 25 square inches
Question A: Formulate and solve a linear programming model for Julia
that will help you advise her if she should lease the booth.

Solution : Objective Function:

Maximise Z = $0.75P +$ 1.05 H +$1.35 B
Constraints:

24P + 16H + 25B <= 55,296 square inches

P >= H+B
H >= 2B
and Non- negative constraints : P, B & H >= 0

She makes a profit of $2250. She makes use of : 1000 + 100 = $1100 .
Therefore : $2250 - $1100 = $1150. Therefore, we advise her to lease the
booth.
Question B: If Julia were to borrow some more money from a friend
before the first game to purchase more ingredients, could she
increase her profit? If so, how much should she borrow and how much
additional profit would she make? What factor constrains her from
borrowing even more money than this amount (indicated in your
answer to the previous question)?
Solution From the report it can be seen that, the Shadow price for the budget
constraint is 1.5 and the allowable increase is 158.88. This means that each
dollar added to the budget can increase a profit of $1.5 and the maximum
allowable increase is 158.88. So maximum amount that Julia can borrow from
her friend to make profit is $158.88 and it will make an additional profit of
158.88 x 1.5 = 238.32.

Question
When

C:
Julia

looked at the solution in (A), she realized that it would be physically

difficult for her to prepare all the hot dogs and barbecue sandwiches
indicated in this solution. She believes she can hire a friend of hers to
help her for $100 per game. Based on the results in (A) and (B), is this
something you think she could reasonably do and should do?
Solution: If Julia hires a friend to help her for $100 per game, her net profit
per game will be

1150-100 = $1050. Still, as per her strategy, it is worth

leasing the booth. Hence, she should hire her friend if it is physically difficult
for her to prepare the required quantity of hot dogs.
Question D: Julia seems to be basing her analysis on the assumption
that everything will go as she plans. What are some of the uncertain
factors in the model that could go wrong and adversely affect Julia's
analysis? Given these uncertainties and the results in (A), (B), and
(C), what do you recommend that Julia do?
Solution: The main uncertain factor is demand. She believes that she will sell
everything she can stock and develop a customer base for the season. If this is
violated, then nothing would work.
As per result in (A), the net profit she can earn is $1150. It is above her target $1000.
Hence, she can suffer a profit of $150/- within her target.
As per result in (B), if she borrows money from her friend of $158.88, she will earn a
profit of $1387 ( $2487 - $1100) where she will selling 1381 pizza slices and 1381 hot
dogs.
Now, as per the result in (C), if she hires for a friend to help her per $100 per game,
she will be earning a profit of $1050 as shown above and the threshold limit for her
preparation of hot dogs is 1108, which is the breakeven. (if she prepares less than
1108, she will be under loss) and we arent sure whether she will be able to prepare
1108 hot dogs by herself. So, its better to hire a friend which will help her to make
profit.