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  • CAED101 - Model Building Activity

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    Ira Grace De Castro
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    The document describes two mathematical modeling problems. The first models the costs and constraints of shipping products from two locations to satisfy monthly demand of 5000 units at a retail store. The optimal solution is to ship at minimum cost while meeting shipping limits and demand. The second models the costs and profits of producing different quantities of a special shoe style. It finds that Nike will break even at an order of 100 pair of shoes and require orders above this size to earn a profit.

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    CAED101_Model Building Activity

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    The document describes two mathematical modeling problems. The first models the costs and constraints of shipping products from two locations to satisfy monthly demand of 5000 units at a retail store. The optimal solution is to ship at minimum cost while meeting shipping limits and demand. The second models the costs and profits of producing different quantities of a special shoe style. It finds that Nike will break even at an order of 100 pair of shoes and require orders above this size to earn a profit.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    244 views2 pages

    CAED101 - Model Building Activity

    Uploaded by

    Ira Grace De Castro
    The document describes two mathematical modeling problems. The first models the costs and constraints of shipping products from two locations to satisfy monthly demand of 5000 units at a retail store. The optimal solution is to ship at minimum cost while meeting shipping limits and demand. The second models the costs and profits of producing different quantities of a special shoe style. It finds that Nike will break even at an order of 100 pair of shoes and require orders above this size to earn a profit.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    of 2

    Ira Grace B. De Castro.

    ACN1 | CAED101

    Model Building

    Problem 1.
    A retail store in Naga, receives shipments of a particular product from Manila and Baguio. Let

    x = number of units of the product received from Manila


    y = number of units of the product received from Baguio

    a. Write an expression for the total number of units of the product received by the retail store in
    Naga.

    Total Product Units = x + y

    b. Shipments from Manila cost $0.20 per unit, and shipments from Baguio cost $0.25 per unit.
    Develop an objective function representing the total cost of shipments to Naga.

    Total Cost of Shipment = 0.20x + 0.25y

    c. Assuming the monthly demand at the retail store is 5000 units, develop a constraint that
    requires 5000 units to be shipped to Naga.

    x + y = 5000

    d. No more than 4000 units can be shipped from Manila, and no more than 3000 units can be
    shipped from Baguio in a month. Develop constraints to model this situation.

    x ≤ 4000
    y ≤ 3000

    e. Of course, negative amounts cannot be shipped. Combine the objective function and
    constraints developed to state a mathematical model for satisfying the demand at the Naga retail
    store at minimum cost.

    Min 0.20x + 0.25y


    subject to
    x + y = 5000 Product Demand
    x ≤ 4000 Maximum units to be shipped from Manila
    y ≤ 3000 Maximum units to be shipped from Baguio
    x, y ≥ 0
    Problem 2.
    Nike will produce a special-style shoe if the order size is large enough to provide a reasonable
    profit. For each special-style order, the company incurs a fixed cost of $1000 for the production
    setup. The variable cost is $30 per pair, and each pair sells for $40.

    a. Let x indicate the number of pairs of shoes produced. Develop a mathematical model
    for the total cost of producing x pairs of shoes.

    Total Production Cost = 30x + 1000

    b. Let P indicate the total profit. Develop a mathematical model for the total profit realized from
    an order for x pairs of shoes.

    P = 40x – (30x+1000)
    P = 40x – 30x – 1000
    P = 10x – 1000

    c. How large must the shoe order be before Nike will break even?

    P(x) = 10x – 1000


    0 = 10x – 1000
    10x = 1000
    10x/10 = 1000/10
    x = 100 pairs of shoes

    It will take an order size of 99 pairs of shoes wherein there is a loss before Nike will breakeven.
    To make a profit, the order size must be greater than the breakeven point of 100 pairs of shoes.

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