BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE-PILANI, HYDERABAD CAMPUS

FIRST SEMESTER 2014-2015

AAOC C222/MATH F212: OPTIMIZATION
TEST I Make up (CLOSED BOOK)
Date: 16-10-2014
Max. Marks: 40
Day: THURSDAY
Time: 60 MIN.
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Note: Answer all the questions. Marks for each question are given at the end of the question.

1. Chandler Enterprises produces two competing products: A and B. The

company wants to sell these products to two groups of customers: group 1
and group 2. The value each customer places on a unit of A and B is shown
the following table.
Group 1 customer
Group 2 customer
Value of A to
Rs 10
Rs 12
Value of B to
Rs 8
Rs 15
Each customer will buy either product A or product B, but not both. A
customer is willing to buy product A if he/she believes that
Value of product A
B &
Value of product A

price of product A Value of product B

price of product A 0

price of product

A customer is willing to buy product B if he/she believes that

Value of product B
A&
Value of product B

price of product B Value of product A

price of product B 0

price of product

Group 1 has 1000 members and group 2 has 1500 members. Chandler wants
to set prices for each product that ensure that group 1 members purchase
product A and group 2 members purchase product B. Formulate an LP that
will help Chandler maximize revenues.
Also, solve the problem graphically.
(14 M)
2. Using Simplex method, find the optimal solution (if exists) of the following
LPP:
(12 M)
z=30 x 14 x 2
Maximize
subject to

5 x1 30+ x2

x1 5
x 1 0, x 2 URS

3. The following is an optimal LP tableau:

Basi
c
z

x1

x2

x3

x4

x5

x6

3/2

3/2

1/2

x4

10

x1

1/2

1/2

1/2

15

x2

3 /2

1 /2

1/2

The variables

x4

x5

and

x6

Sol

are slack variables corresponding to first,

second and constraints, respectively (in the original problem). Using

MATRIX MANIPULATIONS reconstruct the original LP and then compute
the optimum objective value.
(14
M)
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