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Business Analytics (Evans)
Chapter 13 Linear Optimization
1) Which of the following best defines decision variables in an optimization model?
A) They are limitations, requirements, or other restrictions that are imposed on any solution.
B) They are the quantities that the model seeks to maximize or minimize.
C) They are quantities for which no feasible solutions exist.
D) They are unknown values that the model seeks to determine.
Answer: D
Diff: 1
Blooms: Remember
Topic: Building Linear Optimization Models
LO1: Apply the four-step process to show a mathematical model for an optimization problem.
LO2: Identify different business uses for statistics and the major statistical tools businesses use
2) Which of the following best defines objective functions?
A) They are limitations, requirements, or other restrictions that are imposed on any solution in an
optimization model.
B) They are quantities that an optimization model seeks to maximize or minimize.
C) They are quantities for which no feasible solutions exist in an optimization model.
D) They are unknown values that an optimization model seeks to determine.
Answer: B
Diff: 1
Blooms: Remember
Topic: Building Linear Optimization Models
LO1: Apply the four-step process to show a mathematical model for an optimization problem.
3) Which of the following best defines constraints in an optimization problem?
A) They are limitations, requirements, or other restrictions that are imposed on any solution.
B) They are quantities that an optimization model seeks to maximize or minimize.
C) They are quantities for which no feasible solutions exist.
D) They are unknown values that the model seeks to determine.
Answer: A
Diff: 1
Blooms: Remember
Topic: Building Linear Optimization Models
LO1: Apply the four-step process to show a mathematical model for an optimization problem.
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280 Chapter 13: Linear Optimization
Use the following information to answer the following question(s), using the SUMPRODUCT
function.
Stone Age Surfboards is a small manufacturer of two types of popular high-tide surfboards, the
Rockwell and the Limestone models. The manufacturing process consists of two departments:
fabrication and finishing. The fabrication department has 15 skilled workers, each of whom
works 5 hours per day. The finishing department has 5 workers, who also work a 5-hour shift.
Each pair of Rockwell surfboards requires 3 labor hours in the fabrication department and 1.5
labor hours in finishing. The Limestone model requires 4.5 labor-hours in fabrication and 2
labor-hours in finishing. The company operates 6 days a week. It makes a per-unit profit of $60
on the Rockwell model and $75 on the Limestone model. Approximately 4.1 Rockwell models
and 8.4 Limestone models are produced per day.
A B C D
1 Stone Age Surfboards
2
3 Data
4 Product
5 Department Rockwell Limestone Limitation (hours)
6 Fabrication 3 4.5 75
7 Finishing 1.5 2 25
8
9 Profit/Unit $60.00 $75.00
10
11
12 Model
13 Rockwell Limestone
14 Quantity Produced 4.1 8.4 Hours Used
15 Fabrication
16 Finishing
17
18 Excess Limestone
19 Market Mixture
20
21 Total Profit
22 Profit Contribution
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Business Analytics, 2e 281
4) What is the total number of hours used for fabrication?
A) 42.58
B) 50.10
C) 35.64
D) 22.95
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Implementing Linear Optimization Models on Spreadsheets
LO1: Implement linear optimization models on spreadsheets.
LO2: Identify different business uses for statistics and the major statistical tools businesses use
5) What is the total number of hours used for the finishing operation?
A) 42.58
B) 50.10
C) 35.64
D) 22.95
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Implementing Linear Optimization Models on Spreadsheets
LO1: Implement linear optimization models on spreadsheets.
LO2: Identify different business uses for statistics and the major statistical tools businesses use
6) What is the total profit generated?
A) $ 876.00
B) $ 675.50
C) $ 480.50
D) $ 965.00
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Implementing Linear Optimization Models on Spreadsheets
LO1: Implement linear optimization models on spreadsheets.
LO2: Identify different business uses for statistics and the major statistical tools businesses use
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282 Chapter 13: Linear Optimization
Consider the spreadsheet for Stone Age Surfboards provided below. Use this data to answer the
following question(s), using the Standard Solver.
Stone Age Surfboards is a small manufacturer of two types of popular low-tide surfboards, the
Graystone and the Lava models. The manufacturing process consists of two departments:
fabrication and finishing. The fabrication department has 8 skilled workers, each of whom works
9.25 hours per day. The finishing department has 5 workers, each of whom works a 6-hour shift
per day. Each pair of Graystone surfboards requires 2.5 labor hours in the fabrication department
and 2 labor hours in finishing. The Lava model requires 4.2 labor-hours in fabrication and 3.6
labor-hours in finishing. The company operates 6 days a week. It makes a per unit profit of $40
on the Graystone model and $60 on the Lava model. The company anticipates selling at least
twice as many Lava models as Graystone models.
A B C D
1 Stone Age Surfboards
2
3 Data
4 Product
5 Department Graystone Lava Limitation (hours)
6 Fabrication 2.5 4.2 74
7 Finishing 2 3.6 30
8
9 Profit/Unit $40.00 $60.00
10
11
12 Model
13 Graystone Lava
14 Quantity Produced Hours Used
15 Fabrication
16 Finishing
17
18 Excess Lava
19 Market Mixture
20
21 Total Profit
22 Profit Contribution
7) What is the total number of hours used for fabrication?
A) 54.5
B) 30.0
C) 35.5
D) 43.8
Answer: C
Diff: 2
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Business Analytics, 2e 283
Blooms: Apply
AACSB: Analytic Skills
Topic: Solving Linear Optimization Models
LO1: Use the standard and premium Solver add-ins to solve linear optimization models in
Excel.
LO2: Identify different business uses for statistics and the major statistical tools businesses use
8) What is the total number of hours used for the finishing operation?
A) 18.7
B) 30.0
C) 35.5
D) 24.2
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Solving Linear Optimization Models
LO1: Use the standard and premium Solver add-ins to solve linear optimization models in
Excel.
9) What is the total profit generated?
A) $ 675.68
B) $ 920.57
C) $ 521.74
D) $ 788.32
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Solving Linear Optimization Models
LO1: Use the standard and premium Solver add-ins to solve linear optimization models in
Excel.
10) What is the value of slack obtained from the answer report?
A) 46.78
B) 38.46
C) 59.24
D) 23.85
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Solving Linear Optimization Models
LO1: Use the standard and premium Solver add-ins to solve linear optimization models in
Excel.
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284 Chapter 13: Linear Optimization
11) What is the Allowable Increase for Lava surfboards produced?
A) 30
B) 24
C) 12
D) 18
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Solving Linear Optimization Models
LO1: Use the standard and premium Solver add-ins to solve linear optimization models in
Excel.
12) What is the Allowable Decrease for Graystone surfboards produced?
A) 30.74
B) 80.00
C) 12.33
D) 6.67
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Solving Linear Optimization Models
LO1: Use the standard and premium Solver add-ins to solve linear optimization models in
Excel.
13) What is the shadow price for the finishing hours used?
A) 32.46
B) 17.39
C) 8.33
D) 6.67
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Solving Linear Optimization Models
LO1: Use the standard and premium Solver add-ins to solve linear optimization models in
Excel.
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Business Analytics, 2e 285
14) What is the Allowable Increase in the finishing hours used?
A) 32.46
B) 8.33
C) 26.84
D) 16.67
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Solving Linear Optimization Models
LO1: Use the standard and premium Solver add-ins to solve linear optimization models in
Excel.
15) What is the Allowable Decrease in the fabrication hours used?
A) 26.84
B) 16.67
C) 8.33
D) 38.46
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Solving Linear Optimization Models
LO1: Use the standard and premium Solver add-ins to solve linear optimization models in
Excel.
16) What will be the total profit contribution from Lava surfboards?
A) $ 391.30
B) $ 521.74
C) $ 130.43
D) $ 276.65
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Solver Outcomes and Solution Messages
LO1: List the four possible outcomes when solving a linear optimization model and recognize
them from Solver messages.
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286 Chapter 13: Linear Optimization
17) What will be the total profit contribution from Graystone surfboards?
A) $ 391.30
B) $ 521.74
C) $ 130.43
D) $ 276.65
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Solver Outcomes and Solution Messages
LO1: List the four possible outcomes when solving a linear optimization model and recognize
them from Solver messages.
18) If the unit profit on Graystone surfboards is increased by $10, what is the total profit
generated?
A) $ 489.13
B) $ 521.74
C) $ 423.91
D) $ 554.35
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Using Optimization Models for Prediction and Insight
LO1: Use Solver for conducting what-if analysis of optimization models.
19) If the unit profit on Graystone surfboards is increased by $10, what is the Allowable Increase
for Lava surfboards?
A) 30.00
B) 85.00
C) 16.67
D) 58.75
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Using Optimization Models for Prediction and Insight
LO1: Use Solver for conducting what-if analysis of optimization models.
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Business Analytics, 2e 287
20) If the unit profit on Graystone surfboards is increased by $10, what is the Allowable
Decrease for Lava surfboards?
A) 30.00
B) 85.00
C) 16.67
D) 58.75
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Using Optimization Models for Prediction and Insight
LO1: Use Solver for conducting what-if analysis of optimization models.
21) If the unit profit on Graystone surfboards is increased by $10, what is the shadow price for
the finishing hours used?
A) $ 18.48
B) $ 17.39
C) $ 15.42
D) $ 14.15
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Using Optimization Models for Prediction and Insight
LO1: Use Solver for conducting what-if analysis of optimization models.
22) If the unit profit on both Graystone and Lava surfboards is increased by $10, what is the total
profit generated?
A) $ 521.74
B) $ 505.43
C) $ 423.91
D) $ 619.57
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Using Optimization Models for Prediction and Insight
LO1: Use Solver for conducting what-if analysis of optimization models.
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288 Chapter 13: Linear Optimization
23) If the unit profit on both Graystone and Lava surfboards is increased by $10, what is the
Allowable Decrease for Lava surfboards?
A) 95.00
B) 38.46
C) 20.00
D) 11.11
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Using Optimization Models for Prediction and Insight
LO1: Use Solver for conducting what-if analysis of optimization models.
24) If the unit profit on both Graystone and Lava surfboards is increased by $10, what is the
shadow price for the finishing hours used?
A) -4.35
B) 8.33
C) 20.65
D) 32.46
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Using Optimization Models for Prediction and Insight
LO1: Use Solver for conducting what-if analysis of optimization models.
25) Due to decreasing profits, if the production of Graystone surfboards is stopped, compute the
total profit the firm can earn.
A) $ 521.74
B) $ 489.13
C) $ 423.91
D) $ 500.00
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Using Optimization Models for Prediction and Insight
LO1: Use Solver for conducting what-if analysis of optimization models.
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Business Analytics, 2e 289
26) Which of the following solving methods is selected in the Solver dialog for linear and linear
integer optimization problems?
A) GRG Nonlinear
B) Simplex LP
C) SOCP Barrier Engine
D) Evolutionary
Answer: B
Diff: 1
Blooms: Remember
Topic: Solving Linear Optimization Models
LO1: Use the standard and premium Solver add-ins to solve linear optimization models in
Excel.
Use the following information to answer the question(s) below.
Cerebro Manufacturing produces four types of structural support fittings-plugs, rails, rivets, and
clips-which are machined on two CNC machining centers. The machining centers have a
capacity of 250,000 minutes per year. The gross margin per unit and machining requirements are
shown in the spreadsheet below.
A B C D E F
Cerebro
1 Manufacturing Model
2
Machine
Capacity
3 Product Plugs Rails Rivets Clips (mins./year)
4 Gross margin/unit $ 0.40 $ 1.20 $ 0.80 $ 1.10
5 Minutes/unit 1 2 3 1.5 250,000
6 Gross margin/minute
7 Maximum production
8 Profit
27) What is the gross margin per minute of plugs manufactured?
A) $ 0.60
B) $ 0.73
C) $ 0.40
D) $ 0.27
Answer: C
Diff: 1
Blooms: Apply
AACSB: Analytic Skills
Topic: How Solver Works
LO1: Explain how Solver works.
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290 Chapter 13: Linear Optimization
28) What is the gross margin per minute of rivets manufactured?
A) $ 0.60
B) $ 0.73
C) $ 0.40
D) $ 0.27
Answer: D
Diff: 1
Blooms: Apply
AACSB: Analytic Skills
Topic: How Solver Works
LO1: Explain how Solver works.
29) What is the maximum possible production of rails based on the machine capacity?
A) 250,000.00
B) 83,333.33
C) 166,666.67
D) 125,000.00
Answer: D
Diff: 1
Blooms: Apply
AACSB: Analytic Skills
Topic: How Solver Works
LO1: Explain how Solver works.
30) What is the maximum production of clips based on the machine capacity?
A) 250,000.00
B) 83,333.33
C) 166,666.67
D) 125,000.00
Answer: C
Diff: 1
Blooms: Apply
AACSB: Analytic Skills
Topic: How Solver Works
LO1: Explain how Solver works.
31) What is the total profit generated from the manufacture of only plugs?
A) $ 66,666.67
B) $ 100,000.00
C) $ 183,333.33
D) $ 150,000.00
Answer: B
Diff: 1
Blooms: Apply
AACSB: Analytic Skills
Topic: How Solver Works
LO1: Explain how Solver works.
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32) What is the total profit generated from the manufacture of rivets?
A) $ 66,666.67
B) $ 100,000.00
C) $ 183,333.33
D) $ 150,000.00
Answer: A
Diff: 1
Blooms: Apply
AACSB: Analytic Skills
Topic: How Solver Works
LO1: Explain how Solver works.
33) Which of the following options is used if Solver gives an error message that linearity is not
satisfied?
A) Ignore Integer Constraints
B) Show Iteration Results
C) Use Automatic Scaling
D) Use Multistart
Answer: C
Diff: 1
Blooms: Remember
Topic: How Solver Works
LO1: Explain how Solver works.
34) When a model has a unique optimal solution, it means that ________.
A) the objective is maximized or minimized by more than one combination of decision variables
B) there is no solution that simultaneously satisfies all the constraints
C) the Allowable Increase or Allowable Decrease values for changing cells are zero
D) there is exactly one solution that will result in the maximum or minimum objective
Answer: D
Diff: 1
Blooms: Remember
Topic: Solver Outcomes and Solution Messages
LO1: List the four possible outcomes when solving a linear optimization model and recognize
them from Solver messages.
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292 Chapter 13: Linear Optimization
35) If a model has alternative optimal solutions, ________.
A) the objective is maximized or minimized by more than one combination of decision variables
B) there is no solution that simultaneously satisfies all the constraints
C) the objective can be increased or decreased to infinity or negative infinity
D) there is exactly one solution that will result in the maximum or minimum objective
Answer: A
Diff: 1
Blooms: Remember
Topic: Solver Outcomes and Solution Messages
LO1: List the four possible outcomes when solving a linear optimization model and recognize
them from Solver messages.
36) Alternate optimal solutions exist when the ________.
A) reduced cost is equal to the shadow price
B) ratio of the objective coefficient to the constraint coefficient is one
C) Allowable Increase values for changing cells are zero
D) final value of the changing cells is greater than that of the constraints
Answer: C
Diff: 1
Blooms: Remember
Topic: Solver Outcomes and Solution Messages
LO1: List the four possible outcomes when solving a linear optimization model and recognize
them from Solver messages.
37) An unbounded problem is one for which ________.
A) the objective is maximized or minimized by more than one combination of decision variables
B) there is no solution that simultaneously satisfies all the constraints
C) the objective can be increased or decreased to infinity or negative infinity while the solution
remains feasible
D) there is exactly one solution that will result in the maximum or minimum objective
Answer: C
Diff: 2
Blooms: Remember
Topic: Solver Outcomes and Solution Messages
LO1: List the four possible outcomes when solving a linear optimization model and recognize
them from Solver messages.
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38) An infeasible problem is one for which ________.
A) the objective is maximized or minimized by more than one combination of decision variables
B) there is no solution that simultaneously satisfies all the constraints
C) the objective can be increased or decreased to infinity or negative infinity
D) there is exactly one solution that will result in the maximum or minimum objective
Answer: B
Diff: 1
Blooms: Remember
AACSB: Analytic Skills
Topic: Solver Outcomes and Solution Messages
LO1: List the four possible outcomes when solving a linear optimization model and recognize
them from Solver messages.
39) The ________ indicates how much the value of the objective function will change as the
right-hand side of a constraint is increased by 1.
A) objective coefficient
B) shadow price
C) binding constraint
D) reduced cost
Answer: B
Diff: 1
Blooms: Remember
Topic: Using Optimization Models for Prediction and Insight
LO1: Interpret the Solver sensitivity report.
40) Which of the following approaches provided by the Analytic Solver Platform can
automatically run multiple optimizations while varying model parameters within a predefined
range?
A) sensitivity analysis
B) breakdown analysis
C) parameter analysis
D) uncertainty analysis
Answer: C
Diff: 1
Blooms: Remember
Topic: Using Optimization Models for Prediction and Insight
LO1: Use the Sensitivity Report to evaluate scenarios.
41) A constraint function is a function of the decision variables in the problem.
Answer: TRUE
Diff: 1
Blooms: Remember
Topic: Building Linear Optimization Models
LO1: Apply the four-step process to show a mathematical model for an optimization problem.
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294 Chapter 13: Linear Optimization
42) Any solution that satisfies all constraints of a problem is called a feasible solution.
Answer: TRUE
Diff: 1
Blooms: Remember
Topic: Solving Linear Optimization Models
LO1: Implement linear optimization models on spreadsheets.
43) A binding constraint is one for which the Cell Value is greater than the right-hand side of the
value of the constraint.
Answer: FALSE
Diff: 1
Blooms: Remember
Topic: Solving Linear Optimization Models
LO1: Use the standard and premium Solver add-ins to solve linear optimization models in
Excel.
44) Infeasible problems can occur when the demand requirement is higher than the available
capacity.
Answer: TRUE
Diff: 1
Blooms: Remember
Topic: Solver Outcomes and Solution Messages
LO1: List the four possible outcomes when solving a linear optimization model and recognize
them from Solver messages.
45) Whenever a constraint has positive slack, the shadow price is equal to one.
Answer: FALSE
Diff: 1
Blooms: Remember
Topic: Using Optimization Models for Prediction and Insight
LO1: Interpret the Solver sensitivity report.
46) What are the two basic properties of a linear optimization model?
Answer: A linear optimization model has two basic properties: (1) The objective function and
all constraints are linear functions of the decision variables. This means that each function is
simply a sum of terms, each of which is some constant multiplied by a decision variable. (2) All
variables are continuous, meaning that they may assume any real value. This assumption may not
be realistic for a practical business problem, but it simplifies the solution method.
Diff: 1
Blooms: Remember
Topic: Building Linear Optimization Models
LO1: State the properties that characterize linear optimization models.
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47) What are the Excel functions to avoid in linear optimization?
Answer: Several common functions in Excel can cause difficulties when attempting to solve
linear programs using Solver because they are discontinuous and no longer satisfy the conditions
of a linear model. Common Excel functions to avoid are ABS, MIN, MAX, INT, ROUND, IF,
and COUNT.
Diff: 1
Blooms: Remember
Topic: Implementing Linear Optimization Models on Spreadsheets
LO1: Implement linear optimization models on spreadsheets.
48) Explain the simplex method used by Solver.
Answer: Solver uses a mathematical algorithm called the simplex method. It characterizes
feasible solutions algebraically by solving systems of linear equations. It moves systematically
from one corner point to another to improve the objective function until an optimal solution is
found. Because of the linearity of the constraints and objective function, the simplex method is
guaranteed to find an optimal solution if one exists and usually does so quickly and efficiently.
Diff: 1
Blooms: Remember
Topic: How Solver Works
LO1: Explain how Solver works.
49) What are the four possible outcomes that can be obtained by solving a linear optimization
model?
Answer:
• When a model has a unique optimal solution, it means that there is exactly one solution that
will result in the maximum (or minimum) objective.
• If a model has alternative optimal solutions, the objective is maximized (or minimized) by
more than one combination of decision variables.
• An unbounded problem is one for which the objective can be increased or decreased
without bound.
• An infeasible problem is one for which no feasible solution exists.
Diff: 1
Blooms: Remember
Topic: Solver Outcomes and Solution Messages
LO1: List the four possible outcomes when solving a linear optimization model and recognize
them from Solver messages.
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296 Chapter 13: Linear Optimization
50) What is the importance of Shadow Price in the Sensitivity Report?
Answer: The Constraints section of the Sensitivity Report lists the final value of the constraint
function (the left-hand side), a number called the shadow price, the original right-hand side value
of the constraint, and an Allowable Increase and Allowable Decrease. The Shadow Price tells
how much the value of the objective function will change as the right-hand side of a constraint is
increased by 1. Whenever a constraint has positive slack, the shadow price is zero. When a
constraint involves a limited resource, the shadow price represents the economic value of having
an additional unit of that resource.
Diff: 1
Blooms: Remember
Topic: Using Optimization Models for Prediction and Insight
LO1: Interpret the Solver sensitivity report.
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