Management Science 1107

1. Which of the following are components of a mathematical model for decision making?
a. Decision variables.
b. An objective function.
c. Constraints.
d. Parameters.
e. All of the answer choices are correct.

2. Which of the following are steps in a typical management science study?

a. Define the problem and gather data.
b. Formulate a model to represent the problem.
c. Test the model and refine it as needed.
d. Help to implement the recommendations.
e. All of the answer choices are correct.

3. Which of the following is a mathematical expression that gives the measure of performance for the problem?
a. Decision variable.
b. Parameter.
c. Objective function.
d. Constraint.
e. None of the answer choices are correct.

4. In order to produce a new product, a firm must lease equipment at a cost of $10,000 per year. The
managers feel that they can sell 5,000 units per year at a price of $7.50. What is the highest variable cost
that will allow the firm to at least break even on this project?
a. $2.50.
b. $3.50.
c. $4.50.
d. $5.50.
e. $6.50.
Q=Fixed costUnitcost Unit Revenue − Marginal Cost, therefore Marginal Cost = Unit Revenue−Fixed CostQ
=$7.50−$10,0005,000=$5.50

5. Which of the following is TRUE about the break-even point?

a. When sales are equal to the break-even point, profit will be zero.
b. When sales exceed the break-even point, profits will be negative.
c. When sales are below the break-even point, profits will be positive.
d. Once sales exceed the break-even point, profits no longer change if sales increase further.
e. The total revenue and total cost are equal at the point where profits are maximized.

6. Once management makes its decisions, the management science team typically is finished with its
involvement in the problem.
a. True
b. False

7. The best way to solve a break-even problem with a spreadsheet model is to try different production
quantities until the quantity that leads to profits of zero is found.
a. True
b. False
 8. Production has indicated that they can produce widgets at a cost of $15.00 each if they lease new
equipment at a cost of $25,000. Marketing has estimated the number of units they can sell at a number of
prices (shown below). Which price/volume option will allow the firm to avoid losing money on this project?

a. 7,500 units at $17.50 each.

b. 4,000 units at $20.00 each.
c. 3,000 units at $22.50 each.
d. 2,500 units at $25.00 each
e. 1,500 units at $27.50 each.

Calculating the break-even for each price, it is clear that 2,500 units at $25.00 each is the only option where
the sales forecast equals the break-even point.
Q$17.50=$25,000$17.50 − $15.00=10,000 units,Q$17.50=$25,000$17.50 - $15.00=10,000 units,Q$20.00=$
25,000$20.00 − $15.00=5,000 units,Q$20.00=$25,000$20.00 - $15.00=5,000 units,
Q$22.50=$25,000$22.50 − $15.00=3,334 units,Q$22.50=$25,000$22.50 - $15.00=3,334 units,
Q$25.00=$25,000$25.00−$15.00=2,500 units,Q$25.00=$25,000$25.00-$15.00=2,500 units,
Q$27.50=$25,000$27.50 − $15.00=2,000 units

9. In linear programming, solutions that satisfy all of the constraints simultaneously are referred to as:
a. optimal.
b. feasible.
c. nonnegative.
d. targeted.
e. All of the answer choices are correct.

10. When formulating a linear programming problem on a spreadsheet, which of the following is true?
a. Parameters are called data cells.
b. Decision variables are called changing cells.
c. Nonnegativity constraints must be included.
d. The objective function is called the objective cell.
e. All of the answer choices are correct.

11. Which of the following is not a component of a linear programming model?

a. constraints
b. decision variables
c. parameters
d. an objective
e. a spreadsheet

12. Which of the following constitutes a simultaneous solution to the following 2 equations?
(1) 3x1 + 2x2 = 6
(2) 6x1 + 3x2 = 12
a. (x1, x2) = (1, 1.5)
b. (x1, x2) = (0.5, 2)
c. (x1, x2) = (0, 3)
d. (x1, x2) = (2, 0)
e. (x1, x2) = (0, 0)

Using subtraction to eliminate one variable (x1) allows solving for the other (x2). Then substitution of the value
for x2 into an original equation allows us to solve for x1.
2(3x1 + 2x2 = 6) {this equation is multiplied by 2 to allow elimination of x1)
-(6x1 + 3x2 = 12)
0x1 - 2x2 = 0 ⇒ x2 = 0
Since x2 = 0, 3x1 + 2x2 = 6 ⇒ 3x1 = 6 ⇒ x1= 2
13. When formulating a transportation problem on a spreadsheet, which of the following are necessary?
a. A table of data.
b. A network representation.
c. A table for the solution.
d. A table of data and a table for the solution only.
e. All of the answer choices are correct.

14-15. A freelance writer must choose how to spend her time working on several different types of projects.
Newspaper stories take 3 hours to write and pay a flat rate of $45 per story. Magazine articles take much
longer to write (25 hours) but pay significantly better ($400 per article). Proofreading is often tedious, but the
writer can always find proofreading jobs that pay $20 per hour. The writer wants to maximize her income,
but doesn't want to work more than 45 hours per week. Additionally, she dislikes proofreading so she would
like to spend no more than 7 hours per week on that task. Both newspaper stories and magazine articles
must be completed in the week they are started (HINT: use an integer constraint to be sure that all
newspaper and magazine jobs are finished within a week).

14. The writer's problem falls within which classification?

a. Resource-allocation.
b. Cost-benefit-trade-off.
c. Mixed problems.
d. Transportation problems.
e. Assignment problems.

15. Which of the following is the objective function for the writer's problem?
a. Max R = 45N + 400M − 20P
b. Min R = 3N + 25M + P
c. Max R = 45N + 400M + 20P
d. Min R = 3N + 25M + 20P.
e. Max R = 3N + 400M + 20P

Part II. Solver, Algebraic, Graphical models.

Problem 1. The production planner for a private label soft drink maker is planning the production of two soft drinks:
root beer (R) and sassafras soda (S). There are at most 12 hours per day of production time and 1,500 gallons per
day of carbonated water available. A case of root beer requires 2 minutes of time and 5 gallons of water to produce,
while a case of sassafras soda requires 3 minutes of time and 5 gallons of water. Profits for the root beer are $6.00
per case, and profits for the sassafras soda are $4.00 per case. The firm’s goal is to maximize profits.

What is the daily profit when producing the optimal amounts?

$1,800

Using Excel’s Solver add-in, the optimal solution of the linear program shown below is R = 300, S = 0, with weekly
profits of $1,800.
Maximize P = 6R + 4S
subject to 6R + 4S2R + 3S ≤ 720
                5R + 5S ≤ 1,500
and                R ≥ 0, S ≥ 0.

Problem 2.
An electronics firm produces two models of pocket calculators: the A-100 (A) and the B-200 (B). Each model uses
one circuit board, of which there are only 2,500 available for this week’s production. In addition, the company has
allocated a maximum of 800 hours of assembly time this week for producing these calculators. Each A-100 requires
15 minutes to produce while each B-200 requires 30 minutes to produce. The firm forecasts that it could sell a
maximum of 4,000 of the A-100s this week and a maximum of 1,000 B-200s. Profits for the A-100 are $1.00 each
and profits for the B-200 are $4.00 each. The firm’s goal is to maximize profits.
What is the weekly profit when producing the optimal amounts?
$5,200

Using Excel’s Solver add-in, the optimal solution of the linear program shown below is A = 1,200, B = 1,000, with
weekly profits of $5,200.
Maximize P = 1A + 4B
subject to 0.25A + 0.5B ≤ 800
                     A + B ≤ 2,500
                     A ≤ 4,000
                     B ≤ 1,000
and      A ≥ 0, B ≥ 0.

Problem 3
Use the graphical method for linear programming to find the optimal solution for the following problem.
Maximize P = 4x + 5y
subject to 2x + 4y ≤ 12
                5x + 2y ≤ 10
and      x ≥ 0, y ≥ 0.
rev: 02_09_2022_QC_CS-295660
(x, y) = (2, 0)
(x, y) = (0, 3)
(x, y) = (0, 0)
(x, y) = (1, 5)
(x, y) = (1, 2.5)

Graph the two constraints to define the feasible region. Next, find the objective function value that just touches the
edge of the feasible region (here, at point (1, 2.5) the objective function is maximized with a value of 16.5.
 
Alternatively, evaluate the extreme points of the feasible region:
(0, 0) - objective function value 0
(0, 3) - objective function value 15
(2, 0) - objective function value 8
(1, 2.5) - objective function value 16.5 {maximum}

Using Excel’s Solver add-in, the optimal solution of the linear program shown above is x = 1, y = 2.5, with an
objective function value of 16.5.

Problem 4
A firm has 4 plants that produce widgets. Plants A, B, and C can each produce 100 widgets per day. Plant D can
produce 50 widgets per day. Each day, the widgets produced in the plants must be shipped to satisfy the demand of
3 customers. Customer 1 requires 75 units per day, customer 2 requires 100 units per day, and customer 3 requires
175 units per day. The shipping costs for each possible route are shown in the table below:
 
Shipping Costs   Customer
per unit Plant   1   2   3
A  $ 25   $ 35  $ 15
B  $ 20   $ 30  $ 40
C  $ 40   $ 35  $ 20
D  $ 15   $ 20  $ 25

 
The firm needs to satisfy all demand each day, but would like to minimize the total costs.
What is the minimum daily shipping cost that the firm can achieve?
$7,125 xA,1, xA,2, xA,3, xB,1, xB,2, xB,3, xC,1, xC,2, xC,3 integer