Individual Assignment one

Submission date: August 17, 2023

Total Mark: 20%

Part I: Formulate the following problems

1. The manger of an electric company is engaged in the production of two components C1 and
C2 used in the radio sets. Each unit of C1 costs the company birr 5 in wages and birr 5 in
material, while each of C2 costs the company birr 25 in wages and birr 15 in material. The
company sells both products on one period credit terms, but the company’s labors and
material expenses must be paid in cash. The selling price of C1 is birr 30 per unit and C2 is
birr 70 per unit. Because of the strong monopoly of the company for these components, it is
assumed that the company can sell at the prevailing prices as many units as it produces. The
company’s production capacity is, however limited by two considerations. First at the
beginning of period one the company has an initial balance of birr 4,000(cash +bank credit+
collection from past credit sales). Second, the company has available in each period 2,000
hours of machine time and 1,400 hours of assembly time. The production of each C1 requires
3 hours of machine and 2 hours of assembly time, where as the production of each C2
requires 2 hours of machine time and 3 hours for assembly time. Formulate this problem as
Lp model so as to maximize the total profit to the company.

Answer:
Let x1 be the number of units of C1 produced and x2 be the number of units
of C2 produced.
The objective is to maximize the total profit, which is the revenue from sales
minus the total cost. The revenue from selling x1 units of C1 and x2 units of
C2 is:
30x1 + 70x2
The total cost includes the cost of labor and material for producing x1 and x2,
which is:
5x1 + 5x2 + 25x1 + 15x2 = 30x1 + 15x2
The company's initial balance is 4,000, and the cost of producing x1 and x2
cannot exceed the available funds:
5x1 + 25x2 + 5x1 + 15x2 <= 4000
This can be simplified to:
10x1 + 40x2 <= 800
The production of each C1 requires 3 hours of machine time and 2 hours of
assembly time, whereas the production of each C2 requires 2 hours of
machine time and 3 hours of assembly time. The company's available
machine and assembly time must not be exceeded:
3x1 + 2x2 <= 2000 (machine time) 2x1 + 3x2 <= 1400 (assembly time)
The LP model to maximize the total profit can be formulated as follows:
Maximize: 30x1 + 70x2 - (30x1 + 15x2) subject to: 10x1 + 40x2 <= 800 3x1 +
2x2 <= 2000 2x1 + 3x2 <= 1400 x1 >= 0, x2 >= 0
where x1 and x2 are the decision variables representing the number of units
of C1 and C2 produced, respectively.
The first equation represents the objective function to maximize the total profit.
The second, third, and fourth equations represent the constraints on the cost,
machine time, and assembly time, respectively. The last two equations
represent the non-negativity constraints on the decision variables.
Explanation:
Let:
x1 = number of units of C1 produced
x2 = number of units of C2 produced
The objective is to maximize the total profit to the company, which is the
difference between the revenue and the cost:
Total profit = revenue - cost
The revenue is the sum of the revenue from selling C1 and the revenue from
selling C2:
Revenue = 30x1 + 70x2
The cost is the sum of the cost of producing C1 and the cost of producing C2:
Cost = (5+5) x1 + (25+15) x2 = 10x1 + 40x2
The company has the following constraints:
The production capacity constraint for machine time: 3x1 + 2x2 <= 2,000
The production capacity constraint for assembly time: 2x1 + 3x2 <= 1,400
The initial balance constraint: 10x1 + 40x2 <= 4,000
The non-negativity constraint: x1, x2 >= 0
Putting it all together, the LP model for this problem is:
Maximize: 30x1 + 70x2
Subject to:
3x1 + 2x2 <= 2,000
2x1 + 3x2 <= 1,400
10x1 + 40x2 <= 4,000
x1, x2 >= 0
This LP model can be solved using a variety of LP solvers to find the optimal
production levels for C1 and C2 that maximize the total profit to the company,
while respecting the production and budget constraints.

2. An advertising company wishes to pan an advertising campaign in three different media:

television( prime day, prime time), radio and magazine. The purpose of the advertising is to
reach as many potential customers as possible. Following are the results of market study:
Television radio magazine
Prime day prime time
Cost of an advertising unit 40,000 75,000 30,000 15,000
No of potential customers
reached per unit 400,000 900,000 500,000 200,000
no of women customers
reached per unit 300,000 400,000 200,000 100,000
the company does not want to spend more than birr 800,000 on advertising. It is further required
that
i) at least 2 million exposures take place among women
ii) advertising on television be limited to birr 500,000
iii)at least 3 advertising units be bought on prime day and two units during prime time and
iv)the number of advertising units on radio and magazine should each be between 5 and 10.
Formulate this problem as LP model to maximize potential customer reach.
3. a pharmaceutical company produces two pharmaceutical products: A and B . production of
both products require s the same process I and II. The production of B results also by-
product C at no extra cost. The product A can be sold at profit of birr 3 per unit and B at a
profit of birr 8 per unit. Some of this by –product can be sold at a unit profit of birr 2, the
remainder has to be destroyed and destruction cost is birr 1 per unit. Forecast show only up
to 5 units of C can be sold. The company gets 3 units of C for each units of B produced. The
manufacturing times are 3 hours per unit of A on process I and II respectively, and 4 and 5
hours per unit of B on the process I and II respectively. Because product C results from
producing B, no time is used in producing C. the available times are 18 and 21 hours of
process I and II respectively. Formulate this problem as LP model to determine the quantity
of A and B, which should be produce , keeping C in mind the highest profit to the
company.

4. An agriculturist has a 125 acre farm. He produces radish, tomato and potato. Whatever he
raises can be fully sold in the market. He gets birr 5/kg for radish, birr 4/kg for tomato and
birr 5/kg for potato. The average yield is 1,500 kg/acre of radish, 1,800 kg/acre of tomato and
1,200 kg/acre of potato. To produce each 100 kg of radishes and tomato and to produce each
80 kg of potato, a sum of birr 12.5 has to be used for manure. labor required for each acre to
raise the crop is 6 man-days for radish and potato each and 5 man-days for tomato. a total of
500 man-days of labor at a rate of birr 40 per man day are available. Formulate the LPP.

5. A firm manufactures two items. It purchases castings which are then machined, bored and
polished. Castings for items A and B cost $ 2 and 3 respectively and are sold at $ 5 and $ 6
each respectively. Running cost of the three machines are $ 20, 14, 17.5 per hour
respectively. Capacities of the Machines are:
Capacities Part A Part B
Machining Capacity 25/hour 40/hour
Boring Capacity 28/hour 35/hour
 Polishing Capacity 35/hour 25/hour
Formulate the LP model to determine the product mix that maximizes the profit.

6. A marketing manger of large savings and loan association that has branches throughout the
state would like to mail a promotional piece to prospective borrowers. Manger has selected
three regions in which to do a mailing. A marketing agency can supply lists of prospective
borrowers in each region, as shown below.

Region list size cost/ name

1 10,000 .11
2 20,000 .12
3 30,000 .13
The manger would like to have a pool of 15,000 and would like the mail to contain at least 10
percent of the people on each list. Formulate an LP model that will accomplish these
requirements. Assume there is no overlap among lists, and that any quantity can be ordered from
each list.

Part II: Solve the following problems using graphical method

1. A company produces two types of belts, A and B. belt A is of superior quality and B is
inferior. Profit on the two belts is 1.50 birr and 1 birr per belt respectively. Each type of belt
A requires twice as much time as required by belt of type B. if all the belts were of type B,
the company could produce 1000 belts per day. But the supply of leather is sufficient only for
800 belts per day. Belt A requires a fancy buckle and only 400 of them are available per day.
For belt B only 700 buckles are available per day. How should the company manufacture the
two types of belts in order to have maximum overall profit?
2. A company has 8 grade one and 10 grade two inspectors for quality control inspection. At
least 1,800 pieces musty be inspected in an 8 hour day. Grade one inspector can check 25
pieces an hour with the accuracy of 98%. Grade two inspectors can check 15 pieces an hour
with the accuracy of 95%. The wage rate of grade one inspectors is birr 4 per hour, while
grade two inspector is birr 3per hour. Any error made by an inspector cost birr 2 to the
company. Solve the LPP
3. a firm plans to purchase at least 200 quintals of scarp containing high quality metal X and
low quality metal Y. it decides that the scrap to be purchased must contain at least 100
quintals of X metal and not more than 35 quintals of Y metal. The firm can purchase the
scrap from two suppliers (A and B) in unlimited quantities. The percentage of X and Y
metals in terms of weight in the scarp supplied by A and B is given below.

Metals supplier A supplier B

X 25% 75%
Y 10% 20%
The price of A’s scrap is birr 200 per quintal and that of B is birr 400 per quintal. The firm wants
to determine the quantities that it should buy from the two suppliers so that total cost is
minimized.