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Homework 2
Homework 2
750 Constraints
400 Pine Wood: 70x + 50y ≤ 5000
Oak Wood: 20y ≤ 750
Labor Hours: 10x + 18y ≤ 400
Non-negativity: x ≥ 0, y ≥ 0
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
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
Optimal Solution
x 12 8
y 15 7
z 30 11
#VALUE! #VALUE!
Total Return Budget Constraint
$2,500
1. The reduced cost of -100 for deluxe desks suggests increasing their production could raise the profit by $100 per
2. Since pine isn't a binding constraint (shadow price is $0), a 25% reduction in pine won't affect the optimal solutio
3. Allowing 50 extra work hours at $18/hour is beneficial because the shadow price of labor is $25, indicating each
4. Increasing the profit for standard desks to $280 raises total profit by $1,200, as it adds $30 to each of the 40 desk
5. Decreasing the profit for standard desks to $190 decreases total profit by $2,400 and might change the productio
reduced cost.
e the profit by $100 per unit until constraints are affected.
ffect the optimal solution, given current usage is below the maximum.
r is $25, indicating each additional hour of labor adds $25 to profit.
30 to each of the 40 desks produced.
ght change the production balance due to the profit drop exceeding the current
Return on stock B for full investment
- Currently, no shares of stock B are purchased (Final Value = 0), with a reduced cost of -3. To invest fully in stock B
(Objective Coefficient) must be increased enough to make its reduced cost zero or positive. With an allowable incre
return on stock B is increased by at least 3, from 7 to 10, it could potentially become part of the optimal solution.
Return increase for stock C for full investment**:
- Similarly, no shares of stock C are purchased, and the reduced cost is -9. For full investment in stock C, the retur
at least the reduced cost of 9 to make it zero or positive. Therefore, the return on stock C must increase from 11 to