Business Mathematics – Assignment 2

Synopsis: The students are required to solve application problem on linear

programming by using simplex method.
1. A vegetable grower has 80 acres of land which she plans to raise three crops. It
costs RM150 to produce an acre of carrots and the profit is RM40 per acre. It costs
RM160 to produce an acre of celery and the profit is RM50 per acre. Finally, it
costs RM200 to produce an acre of lettuce and the profit is RM60 per acre. Use
the simplex method to find the number of acres of each crop she should plant in
order to maximize her profit. Assume that her cost cannot exceed RM15000.

2. A manufacturer produces three models of bicycles. The times (in hours) required
for assembling, painting, and packaging each model are shown in the table below.
Model A Model B Model C
Assembling 2 2.5 3
Painting 1.5 2 1
Packaging 1 0.75 1.25

The total times available for assembling, painting and packaging are 4006 hours,
2495 hours and 1500 hours, respectively. The profits per unit for the three models
are $45 (model A), $50 (model B) and $55 (model C). How many of each type
should be produced to obtain a maximum profit?

3. Suppose that in question 2 the total times available for assembling, painting and
packaging are 4340 hours, 2980 hours and 2010 hours, respectively, and that the
profits per unit are $48 (model A), $50 (model B) and $52 (model C). How many
of each type should be produced to obtain a maximum profit?

4. An investor has up to $250,000 to invest in three types of investments. Type A

pays 8% annually and has a risk factor of 0. Type B pays 10% annually and has
a risk factor of 0.06. Type C pays 14% annually and has a risk factor of 0.10. To
have a well-balanced portfolio, the investor imposes the following conditions. The
average risk factor should be no greater than 0.05. Moreover, at least one-fourth
of the total portfolio is to be allocated to type A investments and at least one-fourth
of the portfolio is to be allocated to type B investments. How much should be
allocated to each type of investment to obtain a maximum return?

5. An investor has up to $450,000 to invest in three types of investments. Type A

pays 6% annually and has a risk factor of 0. Type B pays 10% annually and has
a risk factor of 0.06. Type C pays 12% annually and has a risk factor of 0.08. To
have a well-balanced portfolio, the investor imposes the following conditions. The
average risk factor should be no greater than 0.05. Moreover, at least one-half of
the total portfolio is to be allocated to type A investments and at least one-fourth
of the portfolio is to be allocated to type B investments. How much should be
allocated to each type of investment to obtain a maximum return?

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6. An athlete uses two dietary supplement drinks that provide the nutritional elements
shown in the table.
Drink Protein Carbohydrates Vitamin D
I 4 2 1
II 1 5 1

Find the combination of drinks of minimum cost that will meet the minimum
requirements of 5 units of protein, 11 units of carbohydrates and 4 units of vitamin
D. Given that drink I costs $5 per litre and drink II costs $8 per litre.

7. Suppose that as in question 6, the athlete would want to find the combination of
drinks of minimum cost that will meet the minimum requirements of 12 units of
protein, 12 units of carbohydrates and 9 units of vitamin D. Given that drink I costs
$7 per litre and drink II costs $4 per litre.
8. An electronics manufacturing company has three production plants, each of which
produces three different models of a particular MP3 player. The daily capacities
(in thousands of units) of the three plants are shown in the table.
Basic model Gold model Platinum model
Plant 1 8 4 8
Plant 2 6 6 3
Plant 3 12 4 8

The total demands are 300,000 units of the Basic model, 172,000 units of the Gold
model, and 249,500 units of the Platinum model. The daily operating costs are
$55,000 for plant 1, $60,000 for plant 2, and $60,000 for plant 3. How many days
should each plant be operated in order to fill the total demand while keeping the
operating cost at a minimum?

9. The company in question 8 has lowered the daily operating cost for plant 3 to
$50,000. How many days should each plant be operated in order to fill the total
demand while keeping the operating cost at a minimum?

10. A small petroleum company owns two refineries. Refinery 1 costs $25,000 per day
to operate, and it can produce 300 barrels of high-grade oil, 200 barrels of
medium-grade oil, and 150 barrels for low-grade oil each day. Refinery 2 is newer
and more modern. It costs $30,000 per day to operate, and it can produce 300
barrels of high-grade oil, 250 barrels of medium-grade oil and 400 barrels of low-
grade oil each day. The company has orders totalling 35,000 barrels of high-grade
oil, 30,000 barrels of medium-grade oil, and 40,000 barrels of low-grade oil. How
many days should the company run each refinery to minimize its costs and still
meet its orders?

11. The company in question 10 has bought a newer refinery to replace the first
refinery. The new refinery costs $35000 to operate, and it can produce 390 barrels
of high-grade oil, 300 barrels of medium-grade oil and 380 of low-grade oil each

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 day. How many days should the company run each refinery to minimize its costs
and still meet its orders?

12. A steel company has two mills. Mill 1 costs $70,000 per day to operate, and it can
produce 400 tons of high-grade steel, 500 tons of medium-grade steel and 450
tons of low-grade steel each day. Mill 2 costs $60,000 per day to operate, and it
can produce 300 tons of high-grade steel, 600 tons of medium-grade steel, and
400 tons of low-grade steel each day. The company has orders totalling 100,000
tons of high-grade steel, 150,000 tons of medium-grade steel and 124,500 tons of
low-grade steel. How many days should the company run each mill to minimize its
costs and still fill the orders?

13. The steel company in question 12 has increased its orders to 150,000 tons of
high-grade steel, 200,000 tons of medium-grade steel and 180,000 tons of low-
grade steel. How many days should the company run each mill to minimize its
costs and still fill the new orders?

Instructions:

1. This is a group assignment.

2. Students are required to solve the problem given. All calculations must be hand
written, neat and clean.
3. Due date of submission is 1 December 2015 (Tuesday) before 4 p.m.
4. The front cover must include:
(a) UCTS logo
(b) Name of group members
(c) Code and name of lecturer
5. Please staple at the upper left corner. No binding.

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 SCHOOL OF BUSINESS AND MANAGEMENT
BUSINESS MATHEMATICS

Synopsis: This assignment required students to solve application problem using linear
programming method.

Rating Level of Descriptions

performance
4 Excellent Student exceeds expectation, able to perform the required
tasks/demonstrate the attributes without lecturer’s guidance
3 Meet standards Student meets expectation, able to perform the required
tasks/demonstrate the attributes with minimum supervision
2 Approaching Student just meets the requirement/expectation, able to
standards perform/demonstrate the attributes with constant guidance
from lecturer and peers
1 Below standards Student is unable to perform the required task/demonstrate
the attributes

Criteria Weight 1 2 3 4 Marks

Able to write out the objective
1.0
function and constraints involved.
Able to solve the equations using
2.0
linear programming method.
Able to interpret outcomes obtained
1.0
from the calculations.
Total group marks
Able to work in a group. 1.0
Total individual marks
*Total marks = (Total group marks + Total individual marks)/2