Operations Research

Assignment 1

Submitted By,

Group Number 08:

Pranav Bhaskar- 40

Ayush Jha- 14

Meet Jain- 27

Gurpreet Singh Gandhi-22

Q 5 Micromedia offers computer training seminar on a variety of topic. In the seminars
each student works at a personal computer, practicing the activity that the instructor is
presenting. Micromedia is currently planning a two-day seminar on the use of Microsoft
Excel in statistical analysis. The projected fee for the seminar is $ 300 per student. The
cost for the conference room, instructor compensation, lab assistants, and promotion is
$4800. Micromedia rents computers for its seminars at a cost of $30 per computer per
day.

a) Develop a model for the total cost to put on the seminar. Let x represent the
number of students who enroll in the seminar.
b) Develop a model for the total profits if x students enroll in seminar.
c) Micromedia has forecasted an enrollment of 30 students for the seminar. How
much profit will be earned if their forecast is accurate?
d) Compute the breakeven point.

Ans:
a)
Objective: Min 60x+4800
Subject to: x≥ 0;
Solution:

Let x be number of the students enrolled for the seminar.

Here, fix cost of conference room, instructor, compensation, etc. is $4800

The variable cost per seminar is given $30

But the seminar is for 2 days, hence variable cost per student will be $60.

b)

Objective: Max 240x-4800

Subject to: x≥0;
60x+4800>0
Solution:

Let x be number of students enrolled for the seminar.

The total cost is 60x + 4800

Revenue generated will be 300x

Hence, profits will be Revenue – cost

 = 300 x – 60x – 4800

= 240x – 4800

c)

Objective: Identify profit if x = 30

Subject to: Total revenue = 300 x

Total cost = 60x + 4800

Solution: Using excel

Profit = 2400

d)

Objective: Identify Break-even point

Subject to: Total revenue = 300 x

Total cost = 60x + 4800

 Solution: Using Goal seek in excel

Q 6 Preliminary plans are under way for the construction of a new stadium for a major
league baseball team. City officials have questioned the number and profitability of the
luxury corporate boxes planned for the upper deck of the stadium. Corporation and
selected individuals may buy the boxes for $100000 each. The fixed construction cost
for the upper deck area is estimated to be $1500000 with a variable cost of $50000 for
each box constructed.

a) What is the breakeven point for the number of luxury boxes in the new stadium?
b) Preliminary drawing for the stadium show that space is available and that all 50
could be sold if constructed. What is your recommendations concerning the
construction of luxury boxes? What is anticipated?

Ans a)

Objective1: Identify Break Even Point

Subject to: Fixed cost = $15,00,000

Variable Cost = $ 50,000

Revenue = $ 100,000

Solution: Using goal seek what-if analysis

X is no of boxes to be constructed

Total cost = 50,000 x + 15,00,000

Total revenue = 100,000 x

Therefore
BEPLuxury Box = 30 units

b)

Objective2: Find profit for 50 boxes

Subject to: Fix cost = $15,00,000

Variable Cost = $ 50,000

Revenue = $ 100,000

Solution: Using goal seek what-if analysis

Let x = 50
As we can easily see there is a profit of 10 lakhs, so we could say the company should
go about with the construction of the boxes.

Q 7 Financial Analyst, Inc. is an investment firm that manages stock portfolios for many
clients. A new client is requesting that the firm handle an %80000 portfolio. As an
initial investment strategy, the client would like to restrict the portfolio to mix of the
following two stocks:
Stock Price/ Maximum Estimated Annual Return/ Possible
Share Share Investment
Oil Alaska $50 $6 $50,000
Southwest $30 $4 $45,000
Petroleum

Let x= number of shares of Oil Alaska

y= number of shares of Southwest Petroleum
a) Develop the objective function, if the client desires to maximize the total annual
return.
b) Show the mathematical expression for each of the following three constraints:
I. Total investment funds available are $80,000.
II. Maximum Oil Alaska investment is $50,000.
III. Maximum South Petroleum investment is $45,000.

Ans:
Let x= number of shares of Oil Alaska
 y= number of shares of Southwest Petroleum

Objective function: Max 6x+ 4y

Subject to
1. 50x + 30 y ≤ 80000
2. 50x ≤ 50000 or x ≤ 10000
3. 30y ≤ 45000 or y ≤ 1500
4. x , y ≥ 0

Q 8 Models of inventory system frequently consider the relationships among a

beginning inventory, a production quantity, a demand or sales, and an ending inventory.
For a given production period j, let
Sj-1 = ending inventory from the previous period (beginning inventory for
period j)
Xj = production quantity in period j
Dj =demand in period j
Sj =ending inventory for period j
a) Write the mathematical relationship or model that describes how these four
variables are related.
b) What constraint should be added if production capacity for period j is given by C j?
c) What constraint should be added if inventory requirements for period j mandate an
ending inventory of atleast Ij?

Ans Let, Sj-1 = ending inventory from the previous period (beginning inventory for
period j)

Xj = production quantity in period j

Dj =demand in period j

Sj =ending inventory for period j

a) Sj = Sj-1 + xj - dj

b) Write constraints

Constraints: xj ≤ Cj

Sj-1 , dj , xj , Sj , Cj ≥ 0 non negative constraint

If Cj is capacity

c)To write constraint for inventory when needed at least Ij .

Constraint: Sj ≥ Ij