Problem Set #3 (Only Problems 1, 2, 5 are due for submission)

Part 2: Advanced Applications of LP

1. Atlantic Air

1.

a. Create a linear program to determine how many seats Atlantic should allocate to
each type of ticket in order to maximize total revenue.
b. Using Excel, determine the optimal number of tickets of each type to sell.
c. Atlantic realizes that they are short a pilot in Chicago, so they decide to fly a pilot
in Philadelphia to Chicago at no expense to the pilot. How and how much will giving
a seat to the pilot for Philadelphia-Chicago change Atlantic’s total revenue?
 2. Betty Jo Inn

Convention Rooms Regular Rooms

2 Nights Fri. only Sat. only 2 Nights Fri. only Sat. only
Rate ($/stay) 223 125 132 294 149 155
Demand 45 15 20 25 35 20
(rooms)

The table also includes the demand for each type of room (the number of people that
would reserve that type of room if we made an unlimited number available).
3. Riverback Gala

Organizers of the Riverback Gala charity concert want to maximize the revenue
they receive from this live concert, but they have only 460 seats in the theater. Of these,
260 are orchestra seats and 200 are balcony seats. The organizers will offer three types
of admission: VIP, Friend of the Gala, and General. The VIPs will be seated in
Orchestra seats, receive free wine and hors d’oeurves, and get a backstage pass. The
Friends of the Gala will be seated in the best remaining seats and also receive
complimentary refreshments. General admission attendees get the remaining seats. The
Gala must pay the theater owner more for each person seated in the orchestra than the
balcony. Netting out these and other costs, the Gala receives revenue of $150 for each
VIP, $120 for each Friend they can seat in the orchestra, $135 for each Friend they can
seat in the balcony, and for General attendees gets $90 for each seated in the orchestra
and $110 for each in the balcony. An “RSVP” program shows the Gala can sell up to
140 VIP tickets, 180 Friends tickets, and 360 General tickets.

a. Formulate a linear program to determine how many of each type of ticket to sell in
each type of seat.

b. Create an Excel linear program for this problem and solve it. How many tickets of
each type does it recommend the organizers sell?

c. Organizers are considering offering incentives to the public to buy a Friends ticket. If
the incentives cost the Gala $15 per person, does this make financial sense?

d. The theater owner may be willing to add a few seats for the concert. Should
organizers request that they be in the orchestra or balcony?

e. A second, different concert may be added if research shows there will be sufficient
interest. What new information would be needed to rerun the model and find the optimal
allocation of seats and tickets for this extra event?
4. Reeva Petroleum

Reeva Petroleum makes regular and super grades of gasoline by blending 3

different petroleum feedstocks. Each grade must not exceed a maximum average vapor
pressure and must not be under a minimum average octane content. Three types of raw
feedstocks are used to produce the regular and super gasolines. The properties and cost
per barrel of the feedstocks, and the required properties and price per barrel of the
gasolines are in the tables below:

Feedstock Octane Vapor Max Supply Cost/bbl

Content Pressure (bbls)
Type 1 91 6 48,000 $44
Type 2 81 15 30,000 $40
Type 3 66 7.5 57,000 $38

Gasoline Min Octane Rating Max Vapor Selling price/(bbl)

Pressure
Regular 72 13.5 $42
Super 90 9 $48

Reeva has already taken an order for 45,000bbl of regular gasoline. Beyond that it can
sell as much as it can make of either of the two grades.

a. Formulate a linear program to determine the amounts of feedstocks to use and grades
to produce that will maximize profit.

b. Use the computer to find the solution to the problem.

c. According to the computer model, what is the objective function coefficient for the
Type 1 used in Regular?

d. If Reeva can get 5,000 more barrels of any one of the feedstocks, which one should it
choose?
5. Juice Kid Inc.

Juice Kid Inc. specializes in making juice boxes for kids. They have two juice products:
All Berry and Berry Splash. They are both made by blending three types of natural
juices: strawberry juice, cranberry juice and red berry juice. For each type of juice, the
amount of Vitamin C and sugar per ton of juice, the maximum monthly supply, and the
cost are shown in the table below:

Strawberry Cranberry Red Berry Juice

Juice Juice
Vitamin C per ton (in units) 0.45 0.39 0.4
Sugar per ton (in tons) 0.48 0.7 0.53
Maximum Supply (in tons) 500 650 600
Supply cost ($/ton) 700 500 600

For each product, the selling price, the production and packing cost, the minimum
required Vitamin C and maximum allowable sugar per ton are shown in the table below:

Price Production and Minimum amount Maximum amount

($/ton) Packing cost of Vitamin C per of Sugar per ton of
($/ton) ton of juice (units) juice (in tons)
All Berry 1200 300 0.4 0.55
Berry 1100 250 0.35 0.58
Splash

The company has committed to provide at least 400 tons of All Berry each month.
Assume the company can sell all the juice it can make of each type each month.

a. Formulate a model to determine the best production plan in order to maximize its
monthly profit. Be sure to define all decision variables and include the objective
function and all constraints.

b. Solve the problem using the computer. How much of each juice should be used in
each product?

c. What will the total profit be?

d. If the company is required to make 300 tons of All Berry instead of 400, what will
happen to total profit?

e. If the cost of Red Berry rises by $20/ton, should the company change its
production plans?