#3

Suppose that the post office can force employees to work one day of overtime each week. For

example, an employee whose regular shift is Monday to Friday can also be required to work on
Saturday. Each employee is paid $50 a day for each of the first five days worked during a week and
$62 for the overtime day (if any). Formulate an LP whose solution will enable the post office to
minimize the cost of meeting its weekly work requirements.

5 Finco must determine how much investment and debtto undertake during the next year. Each
dollar invested reduces the NPV of the company by 10, and each dollar of debt increases the NPV
by 50 (due to deductibility of interest payments). Finco can invest at most $1 million during the
coming year. Debt can be at most 40% of investment. Finco now has $800,000 in cash available. All
investment must be paid for from current cash or borrowed money. Set up an LP whose solution will
tell Finco how to maximize its NPV. Then graphically solve the LP.

1 You have decided to enter the candy business. You are considering producing two types of candies:
Slugger Candy and Easy Out Candy, both of which consist solely of sugar, nuts, and chocolate. At
present, you have in stock 100 oz of sugar, 20 oz of nuts, and 30 oz of chocolate. The mixture used
to make Easy Out Candy must contain at least 20% nuts. The mixture used to make Slugger Candy
must contain at least 10% nuts and 10% chocolate. Each ounce of Easy Out Candy can be sold for
25 , and each ounce of Slugger Candy for 20. Formulate an LP that will enable you to maximize
your revenue from candy sales.