Toyz is a large discount toy store in Valley Wood Mall. The store typically has slow sales in thesummer months that increase dramatically and rise to a peak at Christmas. During the summer andfall, the store must build up its inventory to have enough stock for the Christmas season. Topurchase and build up its stock during the months when its revenues are low, the store borrowsmoney.Following is the store's projected revenue and liabilities schedule for July through December(where revenues are received and bills are paid at the first of each month):MonthRevenuesLiabilitiesJulyAugustSeptemberOctober$20,00030,00040,000$60,00060,00080,00030,00030,00020,00050,000NovemberDecember80,000100,000At the beginning of July, the store can take out a 6-month loan that carries an 11% interest rateand must be paid back at the end of December. The store cannot reduce its interest payment bypaying back the loan early. The store can also borrow money monthly at a rate of 5% interest permonth.Money borrowed on a monthly basis must be paid back at the beginning of the next month. Thestore wants to borrow enough money to meet its cash flow needs while minimizing its cost ofborrowing. Formulate a linear programming model for this problem.[12]

Solution: Linear Programming model is as follows : Decision variables: X = Six-month loan quantity…

Toyz is a large discount toy store in Valley Wood Mall. The store typically has slow sales in the summer months that increase dramatically and rise to a peak at Christmas. During the summer and fall, the store must build up its inventory to have enough stock for the Christmas season. To purchase and build up its stock during the months when its revenues are low, the store borrows money.

Toyz is a large discount toy store in Valley Wood Mall. The store typically has slow sales in the summer months that increase dramatically and rise to a peak at Christmas. During the summer and fall, the store must build up its inventory to have enough stock for the Christmas season. To purchase and build up its stock during the months when its revenues are low, the store borrows money.

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterMB: Model-building Problems

Section: Chapter Questions

Problem 22M

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