QBA 775 Assignment 2 Fall 2012

Name:

1. Acme Inc must send a representative to each of eight different satellite locations. Eight Acme representatives have been identified for the assignments. One representative will be sent to each of the eight satellite locations. Each representative has been asked to rank their preferences from 1 most favorable assignment to 8 their least favorable assignment. The rankings appear in the table below. Determine which representative should be sent to each location in order to minimize the rankings and avoid sending representatives to the least favorable locations. Locations 2.CHI 3.BOS 4 3 8 5 3 6 2 3 1 7 6 6 7 5 1 5

1. NYC Representatives 1. Professor Plum 2. Colonel Mustard 3. Ms Scarlett 4. Mrs. White 5. Miss Peacock 6. Mr. Green 7. The Butler 8. French Maid 3 2 2 7 1 7 5 1

4.N.O 6 4 5 3 2 3 8 4

5.LA 7 5 1 4 5 4 6 2

6.LV 8 1 3 1 6 1 7 8

7.MIA 5 6 4 2 8 8 3 6

8.MIN 2 8 7 8 4 2 4 7

Who should be assigned to each of the cities? Representative New York Chicago Boston New Orleans Los Angeles Las Vegas Miami Minnesota 8. French Maid 7. The Butler 1. Professor Plum 5. Miss Peacock 3. Ms Scarlett 2. Colonel Mustard 4. Mrs. White 6. Mr. Green

Total objective function value?

12

2 Frugal Rent-A-Car has eight store lots in the Greater St. Louis Metropolitan area. At the beginning of each day, they would like to have a predetermined number of cars available at each lot. However, since customers renting a car may return the car to any of the eight lots, the number of cars available at the end of the day does not always equal the designated number of cars needed at the beginning of the day. Frugal would like to redistribute the cars in the lots to meet the minimum demand and minimize the time needed to move the cars. Table I below, summarizes the results at the end of one particular day. Table II below summarizes the time required to travel between the lots. Solve the problem in order to determine how many cars should be transported from one lot to the next. Table I Cars Available Desired Table II From 1 2 3 4 5 6 7 8 1 -14 14 8 11 24 38 30 2 12 -10 16 21 12 30 34 1 36 30 2 20 25 3 10 15 Lot 4 26 40 5 40 30 6 28 20 7 38 30 8 52 60

To (in minutes) 3 17 10 -14 16 9 32 28 4 18 19 12 -18 17 40 35 5 10 16 8 12 -15 25 31 6 20 13 9 15 10 -38 33 7 30 28 34 44 24 36 -31 8 40 32 26 38 28 35 29 --

How many cars will be sent from and to each destination? From 1 1 5 6 6 7 To 2 4 4 3 4 8 Number of Cars 5 1 10 5 3 8

3. Ace Advertising has won the contract to promote the Macaw Heads upcoming concert in Aldrich. They have identified four relevant advertising outlets and using Nielson and Arbitron data gathered the information in Table 1 about each advertising outlet. The advertising budget is limited to $50,000. At least one million of the effective audience contact should be individuals over the age of 40. The number of newspaper ads must be at least five, but no more than 15. For every 106.7 radio ad, there must be at least two 103.1 Radio ads. The effective audience for TV ads must be at least equal to the effective audience for all other ads combined. Formulate the integer LP model to determine the number of ads in each outlet and maximize the effective audience contact. . Advertising Outlets Radio station 103.1 Radio station 106.7 Newspaper TV Effective Audience Contact (000) 10,000 15,000 20,000 50,000 Percent of Effective Audience over 40 80% 50% 60% 50% Cost per ad $200 $300 $400 $1200

3a. How many individuals over the age of 40 will be exposed to the ads? 1,314,000

3b. What would be the effective audience contact if the advertising budget was $60,000? ______

3c. More ads would be purchased for Radio station 106.7 if the effective audience contact was equal to what value? _____________

3d. How many newspaper ads should be purchased? 10

4. Springmeadow park board is considering a new recreation complex with a variety of facilities. Expected costs (in thousands), space requirement (in square feet), and forecasted daily usage figures are given in the table below. The department has a total of $1.2 million to spend on the identified facilities. The building will have a maximum size of 20,000 square feet allocated to the indoor facilities listed below (thus, this area excludes offices, lobbies, meeting rooms, etc.). In addition, there will be a maximum0 of 40,000 square feet of outdoor space available for these facilities. Councilman Bundy feels strongly that at most only one pool should be included in the complex. Councilwoman Simpson insists that if a soccer field and an auditorium are both included, then a skating rink must also be included. If the park board wishes to maximize total daily usage of the complex, formulate the integer programming problem to determine which facilities should be included. Facility Fitness Center (I) Pool (I) Pool (O) Auditorium (I) Gymnasium (I) Tennis courts (O) Baseball field (O) Soccer field (O) Skating rink (I) Cost $120 380 310 310 190 80 60 40 210 Space requirements Expected usage/day 1,200 60 5,500 300 7,200 240 6,000 240 10,200 140 12,000 100 15,000 125 12,000 140 10,000 75

(I) indoor (O) outdoor

4a. What will be the maximum daily usage of the complex? 865

4b. Which facilities will not be included? Pool (O), Auditorium (I), Skating rink (I) 4c. How much of the budget was spent for the complex? 870,000

4d. How much indoor space was used? 16900

4e. How much outdoor space was used? 39,000

5. A&C Distributors produces several outdoor products distributed to discount stores, garden centers, and hardware stores. Currently, A&C is developing a three month shipment plan for two of their products (the Water Wave lawn sprinkler and the Spring Shower lawn sprinkler) to a warehouse belonging to one of the major customers. The table below provides the relevant information for shipping over the three month period. Since the shipping packages/boxes are the same size for both products, no distinction is made between the two products with regards to the shipping capacity. That is, in the table below, 8,000 represents the maximum number of lawn sprinklers (both Water Wave and Spring Shower combined) that can be shipped in March. The units shipped during a given month, but not sold during that month may be put in inventory to be sold during the next month. The inventory costs are given in the last column. Formulate the LP model to meet the minimum requirements and minimize shipping and inventory costs. Shipping Capacity 8000 7000 6000 Minimum Requirement 3000 1800 4000 4000 5000 2000 Unit Cost to Ship .30 .25 .40 .30 .50 .35 Per Unit Inventory Cost .06 .05 .09 .06

Month March April May

Product Water Wave Spring Shower Water Wave Spring Shower Water Wave Spring Shower

5a. How many total lawn sprinklers will be produced in May?

4800

5b. How many Water wave sprinklers will be put in inventory during the months combined? 5400

5c. If only 7,000 sprinklers could be produced in March, what would be the total shipping and inventory costs? -(7000 -8000)*0.050+7200 = 7250

5d. At what value would more Water Wave sprinklers would be shipped during the month of Ma 0.490

6. Mr. Will B. Rich has his eye on a new BMW. However, Will B. Jr. will soon be starting college in 2015 and Mr. Rich plans to finance his sons education primarily based on the interest earned on investments he plans to begin in 2012. Mr. Richs projections for the amount of interest needed in order to cover Jrs education is given in the Table 1 below. Mr. Rich has identified three types of investment alternatives. The length of the investments and the expected return on interest paid at maturity is given in Table 2 below. There is no annual payment of interest on investments B and D. That is, he will receive the interest stated below and the principle when the investment alternative matures. Thus funds used to purchase Investment B in the current year (2012) will return the principle and 18% interest in 2014. He may invest any dollar amount during any year for the three alternatives. Thus, assume it is possible to invest in any of the three alternatives during any year. However, it would obviously not be beneficial to invest in an alternative that would mature after 2018. Mr. Rich wants to determine the minimum amount he needs to invest in 2012 in order to achieve his goals outlined in Table 1 (so he can determine how much of his savings will be left over to spend on a new car). The interest earned after the first year (investments maturing in 2013), will be reinvested in 2013. The same holds true for 2014. The interest earned in 2015 must be at least $22,000. Any interest earned beyond $22,000 will be reinvested. The same holds true for years 2016, 2017. Determine how much funds Mr. Rich needs to invest in 2012 in order to cover the tuition expenses. Table 1 Interest Needed Year $ Needed 2015 $22,000 2016 $23,000 2017 $25,000 2018 $27,000 Table 2 Investment alternatives Investment ROI Maturity A 7% 1 yr B 18% 2 yrs D 40% 4 yrs

6a. During the first year, how much should be invested in Alternative D? 16,428.571

6b. How much money does Mr. Rich need to initially invest to meet his goals?

66,885.678

6c. How much more money would Mr. Rich need to invest if it was decided that $28,000 was needed in 2018? -(28000-27000)*(-0.605) + 66885.678= 67,490.678

6d. Over the course of the investment plan, how much should be invested in Alternative B? 16,343.826 + 18,644.068= 34,987.894

7. Assume Acme Inc is considering introducing a new product - super Deluxe Widgets. The Widgets will sell for $159 per unit. It is anticipated that the first year administrative costs will be $50,000 and the first year advertising budget is projected to be $40,000. The direct labor costs are uncertain, but it is believed they can be accurately can be represented by a uniform distribution with limits of 40 to 100 dollars. Experts in the area have subjectively estimated the parts cost can be simulated by the discrete probability distribution listed below. The forecasted demand for the first year may be represented by a normal distribution with limits a mean of 50,000 and a standard deviation of 10,000. Obtain summary statistics for 20 simulated trials to answer the four questions listed below. (Turn in the computer printout along with this answer sheet). Cost per unit $20 $25 $30 $35 $40 Probability .10 .15 .35 .25 .15

3A). What is the mean profit on the 20 simulated trials?

3B) What is the standard deviation of the 20 simulated trials?

3C). How many simulated trials, if any, resulted in a loss?

3D). Of the 20 simulated trials, what was the maximum profit?