MGT 410 Fall 2009 Take Home Final 1 This is an individual exam.

Keep in mind the university policy on intellectual honesty. The work products must be your own, and by submitting this exam you are asserting that you neither gave nor received assistance from anyone else on this exam. Violations will be sanctioned as indicated in the syllabus. YOU MUST DO FOUR OF THE EIGHT PROBLEMS!!!! You will have a fixed period of time to complete this exam, no exceptions, and you will be able to submit only once before the deadline (no resubmissions allowed). So you have to get it all the way you want before submitting. You may use any source materials to help, including the textbook, but not the work papers of others. Submit this exam as a word document by uploading it into iLearn. Name the file <bhartman>-MGT410 Take Home Final 1.doc, where you insert your cma email moniker for the <bhartman>. THIS IS IMPORTANTI NEED TO BE ABLE TO TRACK YOUR EXAM. Include the question first, and your answer below it. Make sure you clearly identify where your answer starts and ends. You should use Excel as necessary, cutting and pasting the exhibits you want to provide into the word document. You may also submit scanned drawings and images in the word document. Use good clear concise writing to convey what you are thinking about the problem. Dont worry if the answer is not exactly right, if you have provided a clear explanation of what you are trying to do, and the principles involved. All questions have equal weight. The total exam is worth 50 points.

Problem 1: A mail order firm, AmazingCo, can use one of 3 shipping couriers. Ajax Shipping charges $6 per pound and delivers in 2 days. Bilco Lanes charges $9 per pound but guarantees next day delivery. The final courier, Hobo Ltd., charges only $3 per pound but takes 4 days to deliver. AmazingCo has a quarterly budget of $280,000 and a reputation for timely delivery. 1. Formulate the linear program so that the firm delivers as fast as possible within budget for 70,000 pounds of shipments per quarter. 2. Then solve it with the solver and explain the results. Let X1 = pounds using Ajax X2 = pounds using Bilco X3 = pounds using Hobo Ltd

Problem 2: Smalltime Investments Inc. is going to purchase new computers for most of the employees. There are ten employees, and at least eight computers must be purchased. The cost of the basic personal computer with monitor and disk drive is $2,000, while the deluxe version with VGA and advanced processor is $3,500. Due to internal politics, the number of deluxe computers must be no more than half the number of regular computers, but at least three deluxe computers must be purchased. The budget is $27,000. 1. Formulate this as an integer programming problem to maximize the number of computers purchased. 2. Solve using branch and bound, showing all nodes in the tree and the required work.

Problem 3: Answer the following referring to Table 11-7 above by marking the correct answer: Table 11-7 A company has decided to use 0 integer programming to help 1 make some investment decisions. There are three possible investment alternatives from which to choose, but if it is decided that a particular alternative is to be selected, the entire cost of that alternative will be incurred (i.e., it is impossible to build onehalf of a factory). The integer programming model is as follows: Maximize 5000X1 + 7000X2 + 9000X3 Subject to: X1 + X2 + X3 2 Constraint 1 - X1 + X2 0 Constraint 2 25,000 X1 + 32,000 X2 + 29,000X3 62,000 (budget limit) 16 X1 + 14 X2 + 19X3 36 (resource limitation) all variables = 0 or 1 where X1 = 1 if alternative 1 is selected, 0 otherwise X2 = 1 if alternative 2 is selected, 0 otherwise X3 = 1 if alternative 3 is selected, 0 otherwise The optimal solution is X1 = 1, X2 = 0, X3 = 1 1. What is the meaning of Constraint 1? (a) If X1 is selected, X2 must also be selected. (b) No more than two alternatives may be selected. (c) At least two alternatives must be selected. (d) If X2 is selected, X1 must also be selected. (e) none of the above 2. Table 11-7 presents an integer programming problem. What is the meaning of Constraint 2? (a) Both alternatives 1 and 2 must be selected. (b) If alternative 2 is selected, alternative 1 must also be selected. (c) Either alternative 1 or alternative 2 must be selected. (d) No more than one alternative may be selected. (e) none of the above

3. Table 11-7 presents an integer programming problem. If the optimal solution is used, then only two of the alternatives would be selected. How much slack would there be in the third constraint? (a) 1000 (b) 5000 (c) 3300 (d) 8000 (e) none of the above 4. Table 11-7 presents an integer programming problem. Suppose you wish to add a constraint that stipulates that both alternative 2 and alternative 3 must be selected, or neither can be selected. How would this constraint be written? (a) X2 = X3 (b) X2 X3 (c) X2 X3 (d) X2 + X3 = 1 (e) none of the above

Problem 4: A fast food restaurant uses full-time and part-time help to meet fluctuating demand during the day. The following table presents projected need for workers at different times of the day: Time Workers needed 9:00 - 10:00 10:00 - 11:00 11:00- 12:00 12:00- 1:00 1:00- 2:00 2:00- 3:00 3:00- 4:00 4:00- 5:00 4 5 9 10 8 4 3 6

There is a maximum of four full-time workers and the other workers are part-time workers. Each full-time worker is there from 9:00 until 5:00, while the part-time workers will work for 4 consecutive hours at a cost of $4.00 per hour. The cost of the full-time worker is $50 per day. The company wishes to minimize total cost while meeting the demands. Formulate this as a linear programming problem. Carefully define all decision variables. Then solve the problem using the solver and report your answers in English. You may attach your solver sheet if you wish.

Problem 5: First Securities, Inc., an investment firm, has $380,000 on account. The chief investment officer would like to reinvest the $380,000 in a portfolio that would maximize return on investment while at the same time maintaining a relatively conservative mix of stocks and bonds. The following table shows the investment opportunities and rates of return. Investment Opportunity Municipal Bonds High Tech Stock Blue Chip Stock Federal Bonds Rate of Return 0.095 0.146 0.075 0.070

The Board of Directors has mandated that at least 60 percent of the investment consist of a combination of municipal and federal bonds, 25 percent Blue Chip Stock, and no more than 15 percent High Tech Stock. Formulate this portfolio selection problem using linear programming. Solve it with the solver. Interpret the answer in English!

Problem 6: Friendly Manufacturing has three factories (1, 2, and 3) and three warehouses (A, B, and C). The table below shows the shipping costs between each factory (in dollars) and warehouse, the factory manufacturing capabilities (in 1000s), and the warehouse capacities (in 1000s). 1. Write the objective function and the constraint inequalities. Let X1A = 1000s of units shipped from factory 1 to warehouse A, etc. 2. Discuss the meaning of each constraint. 3. Solve using the solver. 4. Is this an example of integer programming? 5. Discuss the relevance of this problem to a logistics and transportation major. From To Production A B C Capability Factory 1 6 5 3 6 Factory 2 8 10 8 8 Factory 3 11 14 18 10 Capacity 7 12 5

Problem 7: Given the cities 1 through 6: 1. Draw the network and label arcs appropriately using the info from the table. 2. Discuss an application of the shortest path problem to logistics. How could it be used to solve a specific problem? 3. Describe how the shortest path algorithm discussed in your study works precisely by enumerating the steps. 4. Find the shortest route from Node 1 to Node 6. Select the answer by circling or give your answer if it is different. (a) total distance = 350 (b) total distance = 410 (c) total distance = 270 (d) total distance = 520 (e) none of the above
Distance 2 100 4 215 3 70 4 200 5 110 4 320 5 200 6 200 6 200

1 2 3 4 5 6 7 8 9

1 1 2 2 2 3 4 4 5

Problem 8 Given the following distances between destination nodes, what is the minimum distance that connects all the nodes? They might be refineries that need to e connected by gas pipes. Show all your work; no credit for just circling an answer.
From 1 1 2 2 1 3 3 4 To 2 3 3 5 4 4 5 5 Distance 100 50 200 325 50 350 400 450

(a) (b) (c) (d) (e)

300 525 675 1925 none of the above