1.

A company produces framed photographs which are sold to retail print

outlets. The company produces three sizes of a particular print. The large
print is 2x3. The medium print is 1.5x2. The small print is 1x1.5. The
company has an inventory of 1000 linear feet of the wood framing material
used for framing all three sizes of prints. The company also has in inventory
600 square feet of the glass used with that framing material. The profit
earned on a large is $8.00. The profit earned on a medium prints is $5.00 and
$2.50 on a small print. At least 100 of the large prints must be manufactured
for used in the stores as demonstration model. Determine how many of each
picture should be produced in order to maximize the profit.
Solution:
Let X1, X2 and X3 be the no. of prints (large, medium and small)
Maximize: z=8X1+5X2+2.5X3
Constraints: 6X1+3X2+1.5X3 >= 60
6X1>=1000
X1, X2, X3 >=0
Solution:
Product
s
Cost
Constrai
nts

X1
8

X2
5

X3
2.5
Usage

Constraints
Operati Availab
on
le

Left
over

Wood

10

1000

<=

1000

Glass

1.5

600

<=

600

Demo

100

>=

100

Producti
on
X1=

100

X2=

X3=

Profit=

800

2) A stock broker has a client who wants to invest $1000000 in the stock market
only. The client wants a diversified stock portfolio. Currently, the brokerage
firm is suggesting that the broker should choose from the following list of
stock.:
Stock

Cost/Share

Manufacturing
Computer
Food
Utility
Electronics
Automobile
Textile
Housing

$50
$4.75
$18.5
$102
$7.8
$65.25
$24.3
$11.6

Risk (110)
3
9
7
1
8
2
6
7

Current Annual
Return (%)
7.7
5.2
12.5
10
7.3
13
4.2
8.1

The client wants diversity in the portfolio where no more than 15% of the
portfolio is invested in any one stock. Although the investor wants a high
return, he would like to control his level of risk. He wants no more than 30%
of his stock acquisitions to be at a risk level of 7 or greater. He also would like
to at least 10% of his portfolio to have a rating of 3 or less. The investor
would prefer that manufacturing, computer and electronic stocks make up
40% or less of the portfolio. He also would like to at least have a ten textile
shares in his portfolio. How many shares of each stock should be purchased
to maximize the total annual return on his portfolio?

Solution:
Let x1, x2, x3, x4, x5, x6, x7, x8 be the number of shares of
manufacturing, computer, food, utility, electronics, automobile,
textile and housing
Maximize:
z=3.85x1+0.247x2+2.3125x3+10.2x4+0.5694x5+8.4825x6+1.
0206x7+0.9396x8
Constraints:
50x1+4.75x2+18.50x3+102x4+7.80x5+65.75x6+24.30x7+11.
60x8 <= 10000000
4.75x2+18.50x3+7.80x5+11.60x8 <= 300000

50x1, 4.75x2, 18.50x3, 102x4, 7.80x5, 65.75x6, 24.30x7,

11.60x8 <= 150000
50x1+102x4+65.75x6 >= 100000
50x1+4.75x2+7.80x5 <=400000
X7>=10

Solution:

Shares of Stock
Cost

X1

X2

X3

X4

X5

X6

X7

X8

3.85

0.247

2.3125

10.2

0.5694

8.4825

1.0206

0.9396

Constraints

Usage

Constraints
Availabl
Inequality
e
100000
<=
0

Left
over

C1

50

4.75

18.5

102

7.8

65.25

24.3

11.6

900000

C2

50

150000

<=

150000

C3

4.75

<=

150000

150000

C4

18.5

150000

<=

150000

C5

102

150000

<=

150000

C6

7.8

<=

150000

150000

65.25

150000

<=

150000

24.3

150000

<=

150000

11.6

150000

<=

150000

4.75

18.5

7.8

11.6

300000

<=

300000

50

102

65.25

450000

>=

100000

-350000

50

4.75

7.8

<=

400000

150000
6172.8
4

>=

10

250000
6162.84

Solution
X1=

3000

X2=

0
8108.1081
08
1470.5882
35

X3=
X4=

100000

3) A vacation resort is planning to increase its bookings by doing some

advertising. However, the decision must be made as to where to spend the
allocated advertising dollars in order to reach the largest number of potential
visitors. The budget for this advertising campaign is set $50000. This budget
is to be spent on a combination of magazine, radio station and TV station.
The magazine charges $1500 for a page ad and reaches 185000 people.
For a 1 minute radio spot, which reaches 290000 people, the cost is $3000. A
one minute television spot reaches 460000 people at a cost of $5, 500. It has
been decided that at least one ad will run in each medium, with no more than
15 magazine ads to be run. At least 40% of the budget will be spent on TV
advertising.
Solution:
Let x1, x2, x3 be the number of runs of each advertising
campaign which is magazine, radio station and television
advertising
Maximize: z=185,500x1+290,500x2+460,000x3
Constraints: 1,500x1+3,000x2+5,500x3<=50,000
X1<=15
X2>=20000
X1, x2, x3 >=1

Media selection

X1
18550
0

Cost
Constraint
C1
C2
C3
C4
C5
C6
Solution
=
X1=
X2=
X3=

15
2.5
3.6363
64

X2
29050
0

X3
46000
0

1500
0
1
0

3000
0
0
1

5500
5500
0
0

Usage
50000
20000
15
2.5

0
1

0
0

1
0

3.6363
64
15

Constraints
Inequali Availab
ty
le
<=
50000
>=
20000
>=
1
>=
1
>=
<=

1
15

Leftove
r
0
0
-14
-1.5
2.6363
6
0

4) A market research company has been hired by a firm to perform market on

the growing interest in the sport of indoor rock climbing. The research id to
done using a mail survey. To do this, the market research firm will buy mailing
lists from various magazines. The company wants to reach both males and
females already involved in some athletic or outdoor activity. Due to these
requirements, the following magazines were chosen. The cost for a mailing
list from the leading rock climbing magazine is $200 and will give a mailing
list of 110,000 readers. Of these readers 75%male and 25% female. The
leading mens fitness magazine reaches 200,000 readers, 10% of which are
women. The cost for this mailing list is $500. The leading womens fitness
magazine charges $400 for their mailing list and reaches 175,000 readers. Of
these readers, 85% are women. The leading general outdoor recreation
magazine has a readership of 250,000 of which 50% are women and 50% are
men. The mailing list for this magazine will cost $350. The leading mail order
outdoor outfitter firm sells the mailing list of its catalog member for $100 and
reaches 50,000 people, of which 40% are women and 60% men. The
marketing firm has allocated $1000 for purchase of these mailing lists. The
company feels that the larger part of those who are becoming indoor rock
climber are men and therefore would like to reach at least twice as many
men as women. Determine which the most appropriate mailing lists for the
marketing firm to purchase.
Solution:
Let x1, x2, x3, x4, x5 be the number of leading rock climbing magazine,
leading mens fitness magazine, leading womens fitness magazine, leading
general outdoor recreation magazine and leading mail outdoor outfitter firm
Media
Maximize: z=110,000x1+200,000x2+175,000x3+250,000x4+50,000x5
Selection
X1
X2
X3
X4
X5
Constraints: 200x1+500x2+400x3+350x4+100x5<=1000
11000
20000
17500
25000
165,000x1+360,000x2+52,500x3+250,000x4+60,000x5>=27,500x1+20,00
Cost
0
0
0
0
50000
Constraints
0x2+148,750x3+125,000x4+20000x5
Inequali Availab
X1,x2,x3,x4,x5>=0
Constraint
Usage
ty
le
C1

200

500

C2

27500

40000

Solution
X1=

3.6101
08

X2=

X3=

0
0.7942
24

X4=
X5=
PEOPLE=

0
59566
7.9

900
27125
0

350
12500
0

100

1000

<=

1000

Left
over
0

-20000

-1.5E11

>=

1.46E11

5) Super Equine Products is planning on producing on reconditioning feed for

horses. The scientific department has determined that to serve as a reconditioning
food, the final feed mix contain 10% or less fat, 30% protein, at least 17% fiber and
20% carbohydrates. The feed will be a combination of corn, wheat, alfalfa, and
sorghum. For its production of this feed, 2000 lb will be initially produced. The
following table contains both the nutritional values and associated costs for each of
the four components of this feed.

Type of Grain
% fat
% protein
% fiber
%
carbohydrate
Cost/lb

corn
6
35
18
41

wheat
2
28
30
40

sorghum
5
40
20
35

Alfalfa
3
30
54
13

1.25

1.15

1.2

.75

Determine the amount of each grain to be mixed to minimize the cost.

Solution:
Let x1,x2, x3, x4 be the mix of corn, wheat, sorghum and alfalfa
Minimize: z=1.25x1+1.15x2+1.20x3+0.70x4
Constraints:
Fat:
0.06x1+0.02x2+0.05x3+0.03x4<=200
Protein:
0.35x1+0.28x2+0.40x3+0.30x4<=600
Fiber:
0.18x1+0.30x2+0.20x3+0.54x4>=340
Carbohydrates:
0.41x1+0.40x2+0.35x3+0.13x4<=400
X1+x2+x3+x4<=2000
X1, x2, x3, x4 >= 0

Product
Cost

Corn
1.25

Constraint
Fat
Protein
Fiber
Carbs
C5

0.06
0.35
0.18
0.41
1

Solution
Corn=

Wheat=

Sorghum=

Wheat
1.15

0.02
0.28
0.3
0.4
1

Sorgh
um
1.2

0.05
0.4
0.2
0.35
1

Alfalfa
0.75

0.03
0.3
0.54
0.13
1

Usage
60
600
1080
260
2000

Constraint
Inequali Availab
ty
le
<=
200
<=
600
>=
340
<=
400
<=
2000

Left
Over
140
0
-740
140
0