Suppose you have a linear optimization modelwhere you are trying to decide which products toproduce to maximize profit. What does the additiveassumption imply about the profit objective? Whatdoes the proportionality assumption imply aboutthe profit objective? Be as specific as possible. Canyou think of any reasonable profit functions thatwould not be linear in the amounts of the productsproduced?

Suppose you have a linear optimization modelwhere you are trying to decide which products toproduce to maximize profit. What does the additiveassumption imply about the profit objective? Whatdoes the proportionality assumption imply aboutthe profit objective? Be as specific as possible. Canyou think of any reasonable profit functions thatwould not be linear in the amounts of the productsproduced?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 40P

See similar textbooks

Similar questions

A company manufactures two products. If it chargesprice pi for product i, it can sell qi units of product i,where q1 = 60 - 3p1 + p2 and q2 = 80 - 2p2 + p1. Itcosts $5 to produce a unit of product 1 and $12 to produce a unit of product 2. How many units of eachproduct should the company produce, and what pricesshould it charge, to maximize its profit? Use spreadsheet modelling in Excel
You are the owner of Caché, a chain of women's clothing boutiques. Your state has a sales tax of 7%, and your city has an additional sales tax of 1.5%. Each quarter you are responsible for making these tax deposits to the city and state. Last quarter your stores had total revenue, including sales tax, of $488,250. a) How much of this revenue was sales (in $) and how much was sales tax (in $)? sales sales tax b) How much sales tax (in $) should be sent to the city? c)How much sales tax (in $) should be sent to the state?
One of your staff members developed the following excel optimal production plan. You must now review this optimal plan and write a memo to the VP of Operations (Mr. Monroe) with recommendations as to how this optimal production plan can be improved to increase the Total Profit. Your recommendation should identify and explain at least 3 options. These three options must be based only with information present in the excel production plan, sensitivity report and components of LP modeling [decision variables, objective function (prices and variable cost) and resource constraints].
One of your staff members developed the following excel optimal production plan. You must now review this optimal plan and write a memo to the VP of Operations (Mr. Monroe) with recommendations as to how this optimal production plan can be improved to increase the Total Profit. Your recommendation should identify and explain at least 3 options. These three options must be based only with information present in the excel production plan, sensitivity report and components of LP modeling [decision variables, objective function (prices and variable cost) and resource constraints] The business memo should be 1 to 2 pages. A professionally written proper style and grammar are worth 50% of the grade. Your recommendations on the three options are worth 50%.
Consider the following profit matrix O Oz 02 0, 04 30 23 10 -3 a2 15 27 20 19 az 13 17 29 32 18 a4 31 21 13 No probabilities are known for the occurrence of the nature states. Compare the solutions obtained by each of the following criteria: а. Laplace b. Махіmin(Minimax) c. Savage d. Hurwitz (assume that a = 0.5)
Suppose that it costs $15 to produce a low-quality wallet and $16 to produce a high-quality wallet, consumers cannot distinguish between the products before purchase, there are no repeat purchases, and consumers value the wallets at their cost of production. The twenty firms in the market produce 500 wallets each. Each firm produces only high-quality or low-quality wallets. Consumers pay the expected value of a wallet. Do any of the firms produce high-quality wallets? A firm will not have an incentive to produce high-quality wallets: If one firm makes a high-quality wallet, then each firm that produces low-quality wallets will earn a profit of $ and the firm that makes the high-quality wallets will earn S. (Enter numeric responses using real numbers rounded to two decimal places.)
2. An analyst determines the intrinsic value of a stock to be equal to 255 lei. If the stock's market price is 285 lei, the stock is most likely: a) overvalued b) undervalued c) fairly valued
Olympic Auto Supply, Inc., produces and distributes auto supplies. The company is anxious to enter the rapidly growing market for long-life batteries that is based on lithium technology. Management believes that to be fully competitive, the price of the new battery that the company is developing cannot exceed P65. At this price, management is confident that the company can sell 50,000 batteries per year. The batteries would require an investment of P2,500,000, and the desired ROI is 20%. Required: Compute the target cost of one battery.
Create a spreadsheet to calculate your projected total costs, total revenues, and total profits for giving a seminar on cost estimating. Make the following assumptions: You will charge $600 per person for a two-day class. You estimate that 30 people will attend the class, but you want to change this input. Your fixed costs include $500 total to rent a room for both days, setup fees of $400 for registration, and $300 for designing a postcard for advertising. Youwill not include your labor costs for this estimate, but you estimate that you will spend at least 150 hours developing materials, managing the project, and giving the actual class. You would like to know what your time is worth given different scenarios. Youwill order 5,000 postcards, mail 4,000, and distribute the rest to friends and colleagues. Yourvariable costs include the following: $5perperson for registration plus 4 percent of the class fee per person to handle credit card processing; assume that everyone pays…
A company manufactures two products. If it charges aprice pi for product i, it can sell qi units of product i, whereq1 60 3p1 p2 and q2 80 2p2 p1. It costs $25to produce a unit of product 1 and $72 to produce a unit ofproduct 2. How many units of each product should beproduced to maximize profits?
A purchasing agent for a particular type of silicon wafer used in the production ofsemiconductors must decide among three sources. Source A will sell the siliconwafers for $2.50 per wafer, independently of the number of wafers ordered. Source Bwill sell the wafers for $2.40 each but will not consider an order for fewer than3,000 wafers, and Source C will sell the wafers for $2.30 each but will not acceptan order for fewer than 4,000 wafers. Assume an order setup cost of $100 and anannual requirement of 20,000 wafers. Assume a 20 percent annual interest rate forholding cost calculations.c. If the replenishment lead time for wafers is three months, determine the reorderpoint based on the on-hand level of inventory of wafers
A purchasing agent for a particular type of silicon wafer used in the production ofsemiconductors must decide among three sources. Source A will sell the siliconwafers for $2.50 per wafer, independently of the number of wafers ordered. Source Bwill sell the wafers for $2.40 each but will not consider an order for fewer than3,000 wafers, and Source C will sell the wafers for $2.30 each but will not acceptan order for fewer than 4,000 wafers. Assume an order setup cost of $100 and anannual requirement of 20,000 wafers. Assume a 20 percent annual interest rate forholding cost calculations.a. Which source should be used, and what is the size of the standing order?