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Homework 3
Homework 3
Objective Function
Maximize Z = 250x + 350y
Constraints
Pine Wood: 70x + 50y ≤ 5000
Oak Wood: 20y ≤ 750
Labor Hours: 10x + 18y ≤ 400
Non-negativity: x ≥ 0, y ≥ 0
Oak Wood Constraint Labor Hours Constraint
0 10
20 18
750
400
Variables Price Per Share Expected Return Per Share Total Budget Constraint
x_A (Stock A) 12 8 2500
x_B (Stock B) 15 7 2500
x_C (Stock C) 30 11 2500
Total Budget Available 2500
Non-negativity & Integrality
Objective Function
Maximize Total Return = 8x_A + 7x_B + 11x_C
Constraints
Budget: 12x_A + 15x_B + 30x_C ≤ 2500
Non-negativity: x_A ≥ 0, x_B ≥ 0, x_C ≥ 0
Integrality: x_A, x_B, x_C are integers
rn = 8x_A + 7x_B + 11x_C
_B + 30x_C ≤ 2500
≥ 0, x_B ≥ 0, x_C ≥ 0
x_C are integers
Optimal Solution
x 12 8
y 15 7
z 30 11
#VALUE! #VALUE!
Total Return Budget Constraint
$2,500
1. Elevating the production of deluxe desks is advantageous, potentially increasing profits by $100 for each
unit, until it is limited by other factors.
2. The optimal solution remains unchanged with a 25% reduction in pine because it is not currently a limiti
with the actual usage not reaching the allowed maximum.
3. It's advantageous to authorize an additional 50 hours of labor at $18 per hour, as each hour's labor cont
the bottom line.
4. Enhancing the profit margin on standard desks to $280 would boost the overall profit by $1,200, as this
extra $30 profit per desk for the 40 desks made.
5. Reducing the profit per standard desk to $190 would lead to a $2,400 decrease in total profit and could
reassessment of the production mix, since the drop in profit surpasses the present reduction in cost.
profits by $100 for each additional
is not currently a limiting factor,
each hour's labor contributes $25 to
rofit by $1,200, as this results in an
n total profit and could necessitate a
reduction in cost.
1. Return on Investment for Stock B when Fully Invested
- Currently, no shares of stock B have been purchased, resulting in a final value of 0. However, by increasing the re
coefficient) of stock B by at least 3 units, from 7 to 10, it could potentially become part of the best investment strat
allowable increase of 3 and aiming to eliminate its reduced cost of -3.
2. Required Return Increase for Stock C for Full Investment
- In a similar manner, no shares of stock C have been acquired, resulting in a reduced cost of -9. To fully invest in s
must increase by a minimum of 9 units, from 11 to at least 20, to make the reduced cost zero or positive.