Assignment 4 solutions, BUS 220 Introduction to Decision Sciences

Problem 1: (30 points)

The spreadsheet for this problem is as follows:
A
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

Number
118
88
48
25

P ercent
23.6%
17.6%
9.6%
5.0%

Gre ar Ti re C o mpany
Tire Mileage
Mean
Standard Deviation
Simulation
Tire
1
2
3
4
5
6

36500
5000
Results

Mileage
38,379
36,597
28,820
38,387
39,638
34,548

Mileage
Exceed 40,000
Les s Than 32,000
Les s Than 30,000
Les s Than 28,000

Note: To reconstruct the complete speads heet:

1. Block row s 21 to 505
2. On the Insert menu, clickRows
3. Copy row 14 (Tire 6) to fill rows 15 to 506.
Trial 500 wil l appear in row 508 of the spreadsheet.
499
500

34,613
38,730

Selected cell formulas are as follows:

Cell Formula
B9
=NORMINV(RAND(),$C$4,$C$5)
F10 =COUNTIF(B9:B508,>40000)
a. Most simulations will provide between 105 and 130 tires exceeding 40,000
miles. The percentage should be roughly 24%.
b.
In Most
Approximate
Mileage
Simulations
Percentage
Number of Tires
32,000
80 to 100
18%
30,000
42 to 55
10%
28,000
18 to 30
4%
c. Of mileages considered, 30,000 miles should come closest to meeting the
tire guarantee mileage guideline.
Problem 2
a.(10 points)
Let
x1 = number of units of product 1 produced
x2 = number of units of product 2 produced
1

Min

P1( d1 )

+ P1( d1 )

P1( d 2 )

P1( d 2 )

+ P2( d 3 )

1x2

d1

d1

350 Goal 1

5x2

1000 Goal 2

2x2

1300 Goal 3

s.t.
1x1
2x1
4x1

x1, x2, d , d , d , d , d , d 0

b. (10 points)
In the graphical solution, point A provides the optimal solution. Note that
with x1 = 250 and x2 = 100, this solution achieves goals 1 and 2, but
underachieves goal 3 (profit) by $100 since 4(250) + 2(100) = $1200.
x2
700
600
500
al
Go
3

400
300

Go
al
1

200

Go a
l2

B (281.25, 87.5)

100
A (250, 100)
0

100

200

300

400

500

x1

c. (10 points)
Max
s.t.

4x1

2x2

1x1
2x2

+
+
x1 ,

1x2
5x2
x2

350
1000
0

Dept. A
Dept. B

The graphical solution indicates that there are four extreme points. The profit
corresponding to each extreme point is as follows:
Extreme Point

Profit

1
2
3
4

4(0) + 2(0) = 0
4(350) + 2(0) = 1400
4(250) + 2(100) = 1200
4(0) + 2(250) = 500

Thus, the optimal product mix is x1 = 350 and x2 = 0 with a profit of $1400.
x2

40 0

rtm
pa
De

30 0

t
en

4 (0,25 0)
De p
artm
en

20 0

tB

3 (25 0,100 )

10 0
Fe asible Re gion
(0,0) 1

10 0

20 0

30 0

x1
40 0

50 0

(35 0,0)

d. (10 points)
The solution to part (a) achieves both labor goals, whereas the solution to
part (b) results in using only 2(350) + 5(0) = 700 hours of labor in
department B. Although (c) results in a $100 increase in profit, the
problems associated with underachieving the original department labor goal
by 300 hours may be more significant in terms of long-term considerations.

Problem 3
a. (10 points)
Note that getting at least 10,000 customers from group 1 is equivalent to x1 =
40,000 (25% of 40,000 = 10,000) and getting 5,000 customers is equivalent to x2 =
50,000 (10% of 50,000 = 5,000). Thus, to satisfy both goals, 40,000 + 50,000 =
90,000 letters would have to be mailed at a cost of 90,000($1) = $90,000.
Let
x1 = number of letters mailed to group 1 customers
x2 = number of letters mailed to group 2 customers

d1 = number of letters mailed to group 1 customers over the desired 40,000

d1 = number of letters mailed to group 1 customers under the desired 40,000
d 2 = number of letters mailed to group 2 customers over the desired 50,000
d 2 = number of letters mailed to group 2 customers under the desired 50,000
d 3 = the amount by which the expenses exceeds the target value of $70,000
d 3 = the amount by which the expenses falls short of the target value of $70,000
Min

P1( d1 )

+ P1( d 2 )

P2( d 3 )

d1

s.t.
x1

d1

x2
1x1 +

1x2

1d

1d

40,000

Goal 1

50,000

Goal 2

70,000

Goal 3

x1, x2, d1 , d1 , d 2 , d 2 , d 3 , d 3 0
b. (10 points) Optimal Solution: x1 = 40,000, x2 = 50,000
c. (10 points) Objective function becomes
min P1( d1 ) + P1(2 d 2 ) + P2( d 3 )
Optimal solution does not change since it is possible to achieve both goals 1 and 2
in the original problem.